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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 Digital Domain Holdings Limited (HKG:547).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. 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 equally, we would consider it foolish to ignore insider transactions altogether. 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.
View our latest analysis for Digital Domain Holdings
The Last 12 Months Of Insider Transactions At Digital Domain Holdings
Over the last year, we can see that the biggest insider purchase was by insider Jian Zhou for HK$36m worth of shares, at about HK$0.12 per share. That means that an insider was happy to buy shares at above the current price of HK$0.09. It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels. Notably Jian Zhou was also the biggest seller.
Over the last year, we can see that insiders have bought 305470000 shares worth HK$37m. On the other hand they divested 162970000 shares, for HK$21m. In the last twelve months there was more buying than selling by Digital Domain Holdings insiders. You can see a visual depiction of insider transactions (by 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!
Digital Domain Holdings 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.
Insider Ownership of Digital Domain Holdings
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. Insiders own 26% of Digital Domain Holdings shares, worth about HK$780m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.