Insider Buyers Lose Additional CN¥292k As China MeiDong Auto Holdings Dips To HK$3.0b

Simply Wall St · 10/16 00:18

The recent 13% drop in China MeiDong Auto Holdings Limited's (HKG:1268) stock could come as a blow to insiders who purchased CN¥742.9k worth of stock at an average buy price of CN¥3.64 over the past 12 months. Insiders purchase with the hope of seeing their investments increase in value over time. However, due to recent losses, their initial investment is now only worth CN¥450.8k, which is not great.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

See our latest analysis for China MeiDong Auto Holdings

China MeiDong Auto Holdings Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Founder & Chairman Fan Ye bought HK$743k worth of shares at a price of HK$3.64 per share. That means that even when the share price was higher than HK$2.21 (the recent price), an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. The only individual insider to buy over the last year was Fan Ye.

You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
SEHK:1268 Insider Trading Volume October 16th 2024

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.

Does China MeiDong Auto Holdings Boast High Insider Ownership?

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that China MeiDong Auto Holdings insiders own 53% of the company, worth about HK$1.6b. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At China MeiDong Auto Holdings Tell Us?

There haven't been any insider transactions in the last three months -- that doesn't mean much. On a brighter note, the transactions over the last year are encouraging. With high insider ownership and encouraging transactions, it seems like China MeiDong Auto Holdings insiders think the business has merit. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To assist with this, we've discovered 3 warning signs that you should run your eye over to get a better picture of China MeiDong Auto Holdings.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions of direct interests only, but not derivative transactions or indirect interests.