We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in Xin Yuan Enterprises Group Limited (HKG:1748).

What Is Insider Buying?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

View our latest analysis for Xin Yuan Enterprises Group

The Last 12 Months Of Insider Transactions At Xin Yuan Enterprises Group

In the last twelve months, the biggest single purchase by an insider was when insider Ming Hua Chen bought HK$176m worth of shares at a price of HK$1.52 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$1.07). 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. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

Xin Yuan Enterprises Group insiders may have bought shares in the last year, but they didn't sell any. 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!

Xin Yuan Enterprises 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

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. It's great to see that Xin Yuan Enterprises Group insiders own 55% of the company, worth about HK$234m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.