Quite a few insiders have dramatically grown their holdings in CSPC Pharmaceutical Group Limited (HKG:1093) over the past 12 months. An insider's optimism about the company's prospects is a positive sign.

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.

Check out our latest analysis for CSPC Pharmaceutical Group

The Last 12 Months Of Insider Transactions At CSPC Pharmaceutical Group

Over the last year, we can see that the biggest insider purchase was by Executive Chairman Dongchen Cai for HK$8.1m worth of shares, at about HK$4.74 per share. Even though the purchase was made at a significantly lower price than the recent price (HK$6.09), we still think insider buying is a positive. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

CSPC Pharmaceutical Group insiders may have bought shares in the last year, but they didn't sell any. 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!

CSPC Pharmaceutical Group is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.

CSPC Pharmaceutical Group Insiders Bought Stock Recently

Over the last quarter, CSPC Pharmaceutical Group insiders have spent a meaningful amount on shares. Not only was there no selling that we can see, but they collectively bought HK$40m worth of shares. This makes one think the business has some good points.

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. We usually like to see fairly high levels of insider ownership. It's great to see that CSPC Pharmaceutical Group insiders own 24% of the company, worth about HK$17b. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At CSPC Pharmaceutical Group Tell Us?

It is good to see recent purchasing. And an analysis of the transactions over the last year also gives us confidence. Once you factor in the high insider ownership, it certainly seems like insiders are positive about CSPC Pharmaceutical Group. Nice! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 1 warning sign for CSPC Pharmaceutical Group you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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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