It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in China Maple Leaf Educational Systems Limited (HKG:1317).

What Is Insider Buying?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.

See our latest analysis for China Maple Leaf Educational Systems

China Maple Leaf Educational Systems Insider Transactions Over The Last Year

Founder Shu Liang Jen made the biggest insider purchase in the last 12 months. That single transaction was for HK$15m worth of shares at a price of HK$3.19 each. That means that an insider was happy to buy shares at above the current price of HK$2.50. Their view may have changed since then, but at least it shows they felt optimistic at the time. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. We note that Shu Liang Jen was both the biggest buyer and the biggest seller.

Happily, we note that in the last year insiders paid HK$97m for 31034000 shares. But they sold 593000 for HK$1.6m. In the last twelve months there was more buying than selling by China Maple Leaf Educational Systems insiders. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

China Maple Leaf Educational Systems is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insiders at China Maple Leaf Educational Systems Have Bought Stock Recently

At China Maple Leaf Educational Systems,over the last quarter, we have observed quite a lot more insider buying than insider selling. In total, two insiders bought CN¥3.2m worth of shares in that time. But VP, Superintendent of Global Education & Executive Director James William Beeke sold shares worth CN¥456k. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. China Maple Leaf Educational Systems insiders own about HK$3.9b worth of shares (which is 52% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Do The China Maple Leaf Educational Systems Insider Transactions Indicate?

It's certainly positive to see the recent insider purchases. And an analysis of the transactions over the last year also gives us confidence. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about China Maple Leaf Educational Systems. Looks promising! If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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, but not derivative transactions.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.