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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 we'll take a look at whether insiders have been buying or selling shares in C-MER Eye Care Holdings Limited (HKG:3309).
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, most countries require that the company discloses such transactions to the market.
We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
View our latest analysis for C-MER Eye Care Holdings
The Last 12 Months Of Insider Transactions At C-MER Eye Care Holdings
Over the last year, we can see that the biggest insider purchase was by Independent Non-Executive Director Chi Leong Chan for HK$2.0m worth of shares, at about HK$5.23 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$4.88). 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 encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. Chi Leong Chan was the only individual insider to buy over the year.
Chi Leong Chan purchased 2200000 shares over the year. The average price per share was HK$5.17. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
C-MER Eye Care 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
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. C-MER Eye Care Holdings insiders own about HK$92m worth of shares. That equates to 1.8% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.