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It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Prosperity International Holdings (H.K.) Limited (HKG:803).
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
See our latest analysis for Prosperity International Holdings (H.K.)
Prosperity International Holdings (H.K.) Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Co-Founder & Chairman Ben Koon Wong for HK$5.0m worth of shares, at about HK$1.98 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$0.14). 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. To us, it's very important to consider the price insiders pay for shares is very important. 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 Ben Koon Wong.
Ben Koon Wong bought a total of 9.2m shares over the year at an average price of HK$0.95. 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!
Prosperity International Holdings (H.K.) is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
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. A high insider ownership often makes company leadership more mindful of shareholder interests. Prosperity International Holdings (H.K.) insiders own about HK$56m worth of shares. That equates to 30% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.