The recent price decline of 11% in Ruihe Data Technology Holdings Limited's (HKG:3680) stock may have disappointed insiders who bought CN¥28.2m worth of shares at an average price of CN¥1.15 in the past 12 months. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only CN¥22.6m.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Ruihe Data Technology Holdings

The Last 12 Months Of Insider Transactions At Ruihe Data Technology Holdings

Over the last year, we can see that the biggest insider purchase was by CEO & Executive Chairman Shouguang Xue for HK$21m worth of shares, at about HK$1.19 per share. That means that even when the share price was higher than HK$0.92 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. 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. The only individual insider to buy over the last year was Shouguang Xue.

Shouguang Xue purchased 24.61m shares over the year. The average price per share was HK$1.15. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

Ruihe Data Technology 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

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Ruihe Data Technology Holdings insiders own 23% of the company, worth about HK$139m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Does This Data Suggest About Ruihe Data Technology Holdings Insiders?

Insider sales and purchases have netted out over the last three months, so it's hard to draw any conclusion from recent trading. On a brighter note, the transactions over the last year are encouraging. Judging from their transactions, and high insider ownership, Ruihe Data Technology Holdings insiders feel good about the company's future. 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. When we did our research, we found 3 warning signs for Ruihe Data Technology Holdings (2 are potentially serious!) that we believe deserve your full attention.

Of course Ruihe Data Technology 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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.