It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So we'll take a look at whether insiders have been buying or selling shares in Forgame Holdings Limited (HKG:484).

What Is Insider Buying?

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 equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.'

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See our latest analysis for Forgame Holdings

The Last 12 Months Of Insider Transactions At Forgame Holdings

The , Wei Gu, made the biggest insider sale in the last 12 months. That single transaction was for HK$33m worth of shares at a price of HK$6.60 each. So we know that an insider sold shares at around the present share price of HK$5.92. While we don't usually like to see insider selling, it's more concerning if the sales take price at a lower price. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign.

Over the last year, we can see that insiders have bought 6.3m shares worth HK$53m. On the other hand they divested 10.1m shares, for HK$66m. All up, insiders sold more shares in Forgame Holdings than they bought, over the last year. The sellers received a price of around CN¥6.60, on average. It's not ideal to see that insiders have sold at around the current price. But we don't put too much weight on the insider selling, since sellers could have personal reasons. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

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Does Forgame Holdings Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Forgame Holdings insiders own 38% of the company, worth about HK$353m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Does This Data Suggest About Forgame Holdings Insiders?

The fact that there have been no Forgame Holdings insider transactions recently certainly doesn't bother us. It's great to see high levels of insider ownership, but looking back at the last year, we don't gain confidence from the Forgame Holdings insiders selling. Along with insider transactions, I recommend checking if Forgame Holdings is growing revenue. This free chart of historic revenue and earnings should make that easy.

But note: Forgame Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

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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.