The recent 12% drop in China Uptown Group Company Limited's (HKG:2330) stock could come as a blow to insiders who purchased CN¥9.04m worth of stock at an average buy price of CN¥0.10 over the past 12 months. Insiders purchase with the hope of seeing their investments increase in value over time. However, due to recent losses, their initial investment is now only worth CN¥7.23m, which is not great.

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.

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China Uptown Group Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by insider Wenlan Zhang for HK$5.5m worth of shares, at about HK$0.10 per share. That means that even when the share price was higher than HK$0.082 (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. To us, it's very important to consider the price insiders pay for shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

While China Uptown Group insiders bought shares during the last year, they didn't sell. 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 China Uptown Group

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.

Insiders At China Uptown Group Have Bought Stock Recently

Over the last quarter, China Uptown Group insiders have spent a meaningful amount on shares. insider Jiadong Zhou spent HK$3.5m on stock, and there wasn't any selling. This is a positive in our book as it implies some confidence.

Does China Uptown Group Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. It's great to see that China Uptown Group insiders own 49% of the company, worth about HK$15m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The China Uptown Group Insider Transactions Indicate?

It is good to see the recent insider purchase. And the longer term insider transactions also give us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. When combined with notable insider ownership, these factors suggest China Uptown Group insiders are well aligned, and quite possibly think the share price is too low. That's what I like to see! 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 5 warning signs for China Uptown Group you should be aware of, and 2 of them are significant.

Of course China Uptown Group 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.

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