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It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Computime Group Limited (HKG:320), you may well want to know whether insiders have been buying or selling.

What Is Insider Selling?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, such insiders must disclose their trading activities, and not trade on inside information.

Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'

See our latest analysis for Computime Group

The Last 12 Months Of Insider Transactions At Computime Group

In the last twelve months, the biggest single purchase by an insider was when Founder & Chairman Ho Auyang bought HK$1.0m worth of shares at a price of HK$1.15 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$0.64). 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. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. The only individual insider to buy over the last year was Ho Auyang.

Ho Auyang bought a total of 996k shares over the year at an average price of HK$1.15. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Computime Group is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insider Ownership of Computime Group

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. Computime Group insiders own about HK$388m worth of shares (which is 69% 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 Computime Group Tell Us?

It doesn't really mean much that no insider has traded Computime Group shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. It would be great to see more insider buying, but overall it seems like Computime Group insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.

Of course Computime Group 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 aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.