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We often see insiders buying up shares in companies that perform well over the long term. 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 Playmates Holdings Limited (HKG:635).
Do Insider Transactions Matter?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
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 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'.
See our latest analysis for Playmates Holdings
The Last 12 Months Of Insider Transactions At Playmates Holdings
Over the last year, we can see that the biggest insider purchase was by Chun Hoo Chan for HK$114m worth of shares, at about HK$1.05 per share. That implies that an insider found the current price of HK$1.17 per share to be enticing. 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. In this case we're pleased to report that the insider purchases were made at close to current prices.
Happily, we note that in the last year insiders bought 111.6m shares for a total of HK$117m. While Playmates Holdings insiders bought shares last year, they didn't sell. 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!
Playmates Holdings is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Does Playmates Holdings Boast High 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that Playmates Holdings insiders own 65% of the company, worth about HK$1.5b. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.