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Geely Automobile Holdings Limited (HKG:175) up 7.0%, but insiders are still down 20% after purchasing CN¥16m of stock last year


Some of the losses seen by insiders who purchased CN¥16m worth of Geely Automobile Holdings Limited (HKG:175) shares over the past year were recovered after the stock increased by 7.0% over the past 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¥3.3m since the time of purchase.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for Geely Automobile Holdings

Geely Automobile Holdings Insider Transactions Over The Last Year

The CEO & Executive Director Sheng Yue Gui made the biggest insider purchase in the last 12 months. That single transaction was for HK$3.6m worth of shares at a price of HK$12.10 each. That means that an insider was happy to buy shares at above the current price of HK$9.49. Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

In the last twelve months Geely Automobile Holdings 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. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

SEHK:175 Insider Trading Volume November 3rd 2022

Geely Automobile Holdings is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider 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. A high insider ownership often makes company leadership more mindful of shareholder interests. It’s great to see that Geely Automobile Holdings insiders own 2.6% of the company, worth about HK$2.4b. 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 Geely Automobile Holdings Insiders?

It doesn’t really mean much that no insider has traded Geely Automobile Holdings shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. It would be great to see more insider buying, but overall it seems like Geely Automobile Holdings insiders are reasonably well aligned (owning significant chunk of the company’s shares) and optimistic for the future. 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. For example – Geely Automobile Holdings has 2 warning signs 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, but not derivative transactions.

Valuation is complex, but we’re helping make it simple.

Find out whether Geely Automobile Holdings is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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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