Those following along with CSPC Pharmaceutical Group Limited (HKG:1093) will no doubt be intrigued by the recent purchase of shares by Dongchen Cai, Executive Chairman of the company, who spent a stonking HK$5.2m on stock at an average price of HK$5.15. While that only increased their holding size by 0.04%, it is still a big swing by our standards.

CSPC Pharmaceutical Group Insider Transactions Over The Last Year

Notably, that recent purchase by Executive Chairman Dongchen Cai was not the only time they bought CSPC Pharmaceutical Group shares this year. Earlier in the year, they paid HK$4.74 per share in a HK$8.1m purchase. That implies that an insider found the current price of HK$5.09 per share to be enticing. Of course they may have changed their mind. But this suggests they are optimistic. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. Happily, the CSPC Pharmaceutical Group insiders decided to buy shares at close to current prices.

In the last twelve months CSPC Pharmaceutical Group insiders were buying shares, but not selling. 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.

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. CSPC Pharmaceutical Group insiders own 24% of the company, currently worth about HK$14b based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

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

It is good to see recent purchasing. We also take confidence from the longer term picture of insider transactions. When combined with notable insider ownership, these factors suggest CSPC Pharmaceutical Group insiders are well aligned, and quite possibly think the share price is too low. That's what I like to see! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing CSPC Pharmaceutical Group. Every company has risks, and we've spotted 1 warning sign for CSPC Pharmaceutical Group you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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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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.