Insiders may be rethinking their CN¥321m Koolearn Technology Holding Limited (HKG:1797) investment now that the company has lost HK$1.1b in value – Simply Wall St

The recent price decline of 20% in Koolearn Technology Holding Limited's (HKG:1797) stock may have disappointed insiders who bought CN¥321m worth of shares at an average price of CN¥28.91 in the past 12 months. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only CN¥49m.
While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.
Check out our latest analysis for Koolearn Technology Holding
The Non-Executive Chairman Minhong Yu made the biggest insider purchase in the last 12 months. That single transaction was for HK$233m worth of shares at a price of HK$30.00 each. That means that even when the share price was higher than HK$4.45 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. 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.
Over the last year, we can see that insiders have bought 11.10m shares worth HK$321m. On the other hand they divested 16.96m shares, for HK$253m. In total, Koolearn Technology Holding insiders bought more than they sold over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Koolearn Technology Holding is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Koolearn Technology Holding insiders own about HK$125m worth of shares. That equates to 2.8% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
The fact that there have been no Koolearn Technology Holding insider transactions recently certainly doesn't bother us. But insiders have shown more of an appetite for the stock, over the last year. With high insider ownership and encouraging transactions, it seems like Koolearn Technology Holding insiders think the business has merit. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To assist with this, we've discovered 3 warning signs that you should run your eye over to get a better picture of Koolearn Technology Holding.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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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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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