Usually, when one insider buys stock, it might not be a monumental event. But when multiple insiders are buying like they did in the case of Horizon Construction Development Limited (HKG:9930), that sends out a positive message to the company's shareholders.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

The Last 12 Months Of Insider Transactions At Horizon Construction Development

Over the last year, we can see that the biggest insider purchase was by Non-Executive Director Ziming He for HK$1.2m worth of shares, at about HK$1.91 per share. That means that an insider was happy to buy shares at above the current price of HK$1.70. It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

Horizon Construction Development insiders may have bought shares in the last year, but they didn't sell any. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, 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.

Insiders At Horizon Construction Development Have Bought Stock Recently

It's good to see that Horizon Construction Development insiders have made notable investments in the company's shares. Non-Executive Director Ziming He spent HK$1.8m on stock, and there wasn't any selling. This is a positive in our book as it implies some confidence.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. From our data, it seems that Horizon Construction Development insiders own 1.1% of the company, worth about HK$60m. But they may have an indirect interest through a corporate structure that we haven't picked up on. Whilst better than nothing, we're not overly impressed by these holdings.

So What Does This Data Suggest About Horizon Construction Development Insiders?

The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. Given that insiders also own a fair bit of Horizon Construction Development we think they are probably pretty confident of a bright 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 Horizon Construction Development you should be aware of.

But note: Horizon Construction Development 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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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.

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