Insiders who bought CN¥2.9m worth of Chaoju Eye Care Holdings Limited (HKG:2219) stock in the last year have seen some of their losses recouped as the stock gained 24% last week. However, the purchase is proving to be an expensive wager as insiders are yet to get ahead of their losses which currently stand at CN¥1.2m since the time of purchase.

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.

See our latest analysis for Chaoju Eye Care Holdings

Chaoju Eye Care Holdings Insider Transactions Over The Last Year

The Chairman & CEO Bozhou Zhang made the biggest insider purchase in the last 12 months. That single transaction was for HK$805k worth of shares at a price of HK$7.35 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$4.60). Their view may have changed since then, but at least it shows they felt optimistic at the time. We always take careful note of the price insiders pay when purchasing 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. Bozhou Zhang was the only individual insider to buy shares in the last twelve months.

Bozhou Zhang purchased 386.50k shares over the year. The average price per share was HK$7.62. 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!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Insider Ownership of Chaoju Eye Care Holdings

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. It's great to see that Chaoju Eye Care Holdings insiders own 45% of the company, worth about HK$1.5b. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Does This Data Suggest About Chaoju Eye Care Holdings Insiders?

The fact that there have been no Chaoju Eye Care Holdings insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. With high insider ownership and encouraging transactions, it seems like Chaoju Eye Care Holdings insiders think the business has merit. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. While conducting our analysis, we found that Chaoju Eye Care Holdings has 1 warning sign and it would be unwise to ignore this.

Of course Chaoju Eye Care Holdings 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, but not derivative transactions.

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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.