Insiders Enjoy S$1.5m Return After Buying Indigo Star Holdings Stock
Insiders who bought Indigo Star Holdings Limited (HKG:8373) in the last 12 months may probably not pay attention to the stock's recent 13% drop. After accounting for the recent loss, the S$7.44m worth of shares they purchased is now worth S$8.99m, suggesting a good return on their investment.
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.
Indigo Star Holdings Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Executive Chairman Ming Chan for HK$7.4m worth of shares, at about HK$0.65 per share. Even though the purchase was made at a significantly lower price than the recent price (HK$0.79), we still think insider buying is a positive. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
View our latest analysis for Indigo Star Holdings
Indigo Star Holdings is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.
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. It's great to see that Indigo Star Holdings insiders own 59% of the company, worth about HK$25m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Does This Data Suggest About Indigo Star Holdings Insiders?
The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. When combined with notable insider ownership, these factors suggest Indigo Star Holdings insiders are well aligned, and quite possibly think the share price is too low. Nice! 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. For example, Indigo Star Holdings has 3 warning signs (and 2 which can't be ignored) we think you should know about.
But note: Indigo Star Holdings 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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