Some of the losses seen by insiders who purchased CN¥33.0m worth of Xiabuxiabu Catering Management (China) Holdings Co., Ltd. (HKG:520) shares over the past year were recovered after the stock increased by 14% over the past week. The purchase, however, has proven to be a pricey bet, with losses currently totalling CN¥13m.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Xiabuxiabu Catering Management (China) Holdings

Xiabuxiabu Catering Management (China) Holdings Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when CEO & Executive Chairman of the Board Kuang-Chi Ho bought HK$4.1m worth of shares at a price of HK$1.66 per share. That means that an insider was happy to buy shares at above the current price of HK$0.95. Their view may have changed since then, but at least it shows they felt optimistic at the time. We always take careful note of the price insiders pay when purchasing shares. 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. Kuang-Chi Ho was the only individual insider to buy during the last year.

Kuang-Chi Ho purchased 20.58m shares over the year. The average price per share was HK$1.61. You can see the insider transactions (by companies and 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!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.

Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 39% of Xiabuxiabu Catering Management (China) Holdings shares, worth about HK$399m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Does This Data Suggest About Xiabuxiabu Catering Management (China) Holdings Insiders?

The fact that there have been no Xiabuxiabu Catering Management (China) Holdings insider transactions recently certainly doesn't bother us. But insiders have shown more of an appetite for the stock, over the last year. Judging from their transactions, and high insider ownership, Xiabuxiabu Catering Management (China) Holdings insiders feel good about the company's future. 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 Xiabuxiabu Catering Management (China) Holdings you should be aware of.

But note: Xiabuxiabu Catering Management (China) 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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