Investors who take an interest in Shanghai Chicmax Cosmetic Co., Ltd. (HKG:2145) should definitely note that the Independent Non-Executive Director, Yan Luo, recently paid HK$35.79 per share to buy HK$1.8m worth of the stock. Although the purchase only increased their holding by 5.9%, it is still a solid purchase in our view.

Shanghai Chicmax Cosmetic Insider Transactions Over The Last Year

Notably, that recent purchase by Independent Non-Executive Director Yan Luo was not the only time they bought Shanghai Chicmax Cosmetic shares this year. Earlier in the year, they paid HK$40.51 per share in a HK$12m purchase. That means that even when the share price was higher than HK$31.85 (the recent price), an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

In the last twelve months Shanghai Chicmax Cosmetic insiders were buying shares, but not selling. 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!

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

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. Shanghai Chicmax Cosmetic insiders own about HK$5.1b worth of shares (which is 40% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At Shanghai Chicmax Cosmetic Tell Us?

It is good to see recent purchasing. We also take confidence from the longer term picture of insider transactions. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about Shanghai Chicmax Cosmetic. One for the watchlist, at least! 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. For example - Shanghai Chicmax Cosmetic has 1 warning sign we think you should be aware of.

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.