Kafelaku Coffee Holding Up 12%, Insiders Still Down After HK$223.5m Purchase
Some of the losses seen by insiders who purchased HK$223.5m worth of Kafelaku Coffee Holding Limited (HKG:1869) shares over the past year were recovered after the stock increased by 12% over the past week. However, the purchase is proving to be a costly gamble, since losses made by insiders have totalled HK$211m since the time of purchase.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
Kafelaku Coffee Holding Insider Transactions Over The Last Year
The insider Wei Zhang made the biggest insider purchase in the last 12 months. That single transaction was for HK$224m worth of shares at a price of HK$1.00 each. That means that even when the share price was higher than HK$0.055 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. Wei Zhang was the only individual insider to buy shares in the last twelve months.
The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
See our latest analysis for Kafelaku Coffee Holding
Kafelaku Coffee Holding 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.
Insiders At Kafelaku Coffee Holding Have Sold Stock Recently
The last quarter saw substantial insider selling of Kafelaku Coffee Holding shares. Specifically, insiders ditched HK$41m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.
Does Kafelaku Coffee Holding Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 23% of Kafelaku Coffee Holding shares, worth about HK$18m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About Kafelaku Coffee Holding Insiders?
Insiders sold stock recently, but they haven't been buying. On the other hand, the insider transactions over the last year are encouraging. And insiders do own shares. So the recent selling doesn't worry us too much. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Be aware that Kafelaku Coffee Holding is showing 4 warning signs in our investment analysis, and 3 of those are concerning...
But note: Kafelaku Coffee Holding may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
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.