Jacobson Pharma Corporation Limited (HKG:2633) insiders profited after buying shares worth HK$20m last year, current gains stand at HK$1.9m
Insiders who bought Jacobson Pharma Corporation Limited (HKG:2633) 12-month equity fans probably aren’t as affected by last week’s 13% loss. After accounting for the recent loss, the HK$20 million of shares they bought are now worth HK$22 million, suggesting a good return on their investment.
While we don’t think shareholders should simply follow insider trades, we think it makes perfect sense to keep an eye on what insiders are doing.
Check opportunities and risks within the Hong Kong pharmaceutical industry.
Jacobson Pharma insider trading over the past year
Over the past year, we can see that the biggest insider buy was made by Chairman Kwong Yip Sum for HK$2.1 million of shares, at around HK$0.82 per share. This means that even when the stock price was above HK$0.75 (the recent price), an insider wanted to buy stock. Although their perspective has changed since the purchase, it at least suggests that they have confidence in the future of the company. In our view, the price an insider pays for a stock is very important. It is encouraging to see an insider paid above the current stock price, as it suggests that they have perceived value even at higher levels. Kwong Yip Sum was the only individual insider to buy in the past year.
Kwong Yip Sum purchased a total of 29.01 million shares during the year at an average price of HK$0.69. The chart below shows insider trading (by companies and individuals) over the past year. By clicking on the graph below, you will be able to see the precise detail of each insider trade!
Jacobson Pharma isn’t the only insider stock to buy. So take a look at this free list of growing companies with insider buying.
Examining the total insider holdings in a company can help you know if they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely insiders will be incentivized to build the company for the long term. It’s great to see that Jacobson Pharma insiders own 63% of the company, which is worth around HK$906 million. I like to see this level of insider ownership because it increases the chances that management is thinking about the best interests of shareholders.
What could insider trading at Jacobson Pharma tell us?
There have been no insider trades in the last three months – that’s not saying much. However, our analysis of transactions over the past year is encouraging. It would be great to see more insider buying, but overall it looks like Jacobson Pharma insiders are reasonably well-aligned (holding a significant portion of the company’s stock) and optimistic about the future. So these insider trades can help us build a thesis on the stock, but it’s also helpful to know the risks this company faces. To help you, we found 2 warning signs (1 doesn’t sit well with us!) that you should be aware of before buying shares of Jacobson Pharma.
But note: Jacobson Pharma may not be the best stock to buy. So take a look at this free list of interesting companies with high ROE and low debt.
For the purposes of this article, insiders are persons who report their transactions to the relevant regulatory body. We currently record open market transactions and private dispositions, but not derivative transactions.
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