SMIT Holdings Slides As Insider Purchases Lose Another US$233k
Insiders who bought US$718.2k worth of SMIT Holdings Limited's (HKG:2239) stock at an average buy price of US$1.08 over the last year may be disappointed by the recent 12% decrease in the stock. Insiders purchase with the hope of seeing their investments increase in value over time. However, due to recent losses, their initial investment is now only worth US$485.5k, which is not great.
Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.
SMIT Holdings Insider Transactions Over The Last Year
The Founder Xueliang Huang made the biggest insider purchase in the last 12 months. That single transaction was for HK$718k worth of shares at a price of HK$1.08 each. That means that an insider was happy to buy shares at above the current price of HK$0.73. It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. The only individual insider to buy over the last year was Xueliang Huang.
The chart below shows insider transactions (by companies and 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!
See our latest analysis for SMIT Holdings
SMIT Holdings is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.
Insider Ownership Of SMIT Holdings
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. SMIT Holdings insiders own 61% of the company, currently worth about HK$144m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Does This Data Suggest About SMIT Holdings Insiders?
It doesn't really mean much that no insider has traded SMIT Holdings shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. It would be great to see more insider buying, but overall it seems like SMIT Holdings insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing SMIT Holdings. Every company has risks, and we've spotted 2 warning signs for SMIT Holdings (of which 1 makes us a bit uncomfortable!) you should know about.
Of course SMIT Holdings may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions of direct interests only, but not derivative transactions or indirect interests.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.