Over the last year, a good number of insiders have significantly increased their holdings in OSL Group Limited (HKG:863). This is encouraging because it indicates that insiders are more optimistic about the company's prospects.

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.

OSL Group Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by insider Shuai Liu for HK$713m worth of shares, at about HK$3.80 per share. Even though the purchase was made at a significantly lower price than the recent price (HK$9.11), we still think insider buying is a positive. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

Over the last year, we can see that insiders have bought 216.35m shares worth HK$962m. On the other hand they divested 5.35m shares, for HK$34m. In the last twelve months there was more buying than selling by OSL Group insiders. They paid about HK$4.45 on average. We don't deny that it is nice to see insiders buying stock in the company. But we must note that the investments were made at well below today's share price. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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.

OSL Group Insiders Bought Stock Recently

At OSL Group,over the last quarter, we have observed quite a lot more insider buying than insider selling. In total, insider Heung Wing Leung bought HK$249m worth of shares in that time. But we did see insider Heung Wing Leung sell shares worth HK$34m. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.

Insider Ownership Of OSL Group

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. OSL Group insiders own about HK$2.0b worth of shares (which is 34% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About OSL Group Insiders?

The recent insider purchase is heartening. 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. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about OSL Group. One for the watchlist, at least! 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. Every company has risks, and we've spotted 3 warning signs for OSL Group (of which 1 makes us a bit uncomfortable!) 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.