Founder Kam Chu Foo Just Bought A Handful Of Shares In Soundwill Holdings Limited (HKG:878)

Even if it's not a huge purchase, we think it was good to see that Kam Chu Foo, the Founder of Soundwill Holdings Limited (HKG:878) recently shelled out HK$349k to buy stock, at HK$7.35 per share. Although the purchase is not a big one, by either a percentage standpoint or absolute value, it can be seen as a good sign.

See our latest analysis for Soundwill Holdings

The Last 12 Months Of Insider Transactions At Soundwill Holdings

In fact, the recent purchase by Founder Kam Chu Foo was not their only acquisition of Soundwill Holdings shares this year. They previously made an even bigger purchase of HK$1.3m worth of shares at a price of HK$9.72 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$7.00). 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 an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. The only individual insider to buy over the last year was Kam Chu Foo.

Kam Chu Foo bought a total of 505.50k shares over the year at an average price of HK$10.00. The chart below shows insider transactions (by 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!

SEHK:878 Recent Insider Trading May 23rd 2020
SEHK:878 Recent Insider Trading May 23rd 2020

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Soundwill Holdings insiders own about HK$1.5b worth of shares (which is 74% 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.

What Might The Insider Transactions At Soundwill Holdings Tell Us?

It is good to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. When combined with notable insider ownership, these factors suggest Soundwill Holdings insiders are well aligned, and quite possibly think the share price is too low. 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. To help with this, we've discovered 4 warning signs (1 is potentially serious!) that you ought to be aware of before buying any shares in Soundwill Holdings.

Of course Soundwill 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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