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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. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Honworld Group Limited (HKG:2226), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.
We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. 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 Honworld Group
The Last 12 Months Of Insider Transactions At Honworld Group
In the last twelve months, the biggest single purchase by an insider was when Founder Weizhong Chen bought HK$1.3m worth of shares at a price of HK$3.34 per share. That means that an insider was happy to buy shares at around the current price of HK$3.86. That means they have been optimistic about the company in the past, though they may have changed their mind. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. The good news for Honworld Group share holders is that an insider was buying at near the current price. Weizhong Chen was the only individual insider to buy over the year.
Weizhong Chen purchased 776500 shares over the year. The average price per share was HK$3.33. 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!
Honworld Group is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insider Ownership
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Honworld Group insiders own 49% of the company, currently worth about HK$1.1b based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.