Insiders who bought CN¥9.98m worth of Newlink Technology Inc.'s (HKG:9600) stock at an average buy price of CN¥2.56 over the last year may be disappointed by the recent 30% decrease in the stock. Insiders invest with the hopes of seeing their money grow in value over time. However, as a result of recent losses, their initial investment is now only worth CN¥5.23m, which is not what they expected.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Newlink Technology 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 Shuchun Zhai bought HK$5.1m worth of shares at a price of HK$2.68 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$1.34). Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. The only individual insider to buy over the last year was Shuchun Zhai.

Shuchun Zhai bought a total of 3.90m shares over the year at an average price of HK$2.56. 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!

Newlink Technology is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Newlink Technology insiders own 56% of the company, currently worth about HK$703m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Do The Newlink Technology Insider Transactions Indicate?

It's certainly positive to see the recent insider purchase. And an analysis of the transactions over the last year also gives 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 Newlink Technology insiders are well aligned, and quite possibly think the share price is too low. Looks promising! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Newlink Technology. For example, Newlink Technology has 3 warning signs (and 2 which are potentially serious) we think you should know about.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.

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