Quite a few insiders have dramatically grown their holdings in HG Metal Manufacturing Limited (SGX:BTG) over the past 12 months. An insider's optimism about the company's prospects is a positive sign.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for HG Metal Manufacturing

The Last 12 Months Of Insider Transactions At HG Metal Manufacturing

The insider Jun Xue made the biggest insider purchase in the last 12 months. That single transaction was for S$3.5m worth of shares at a price of S$0.28 each. That means that an insider was happy to buy shares at around the current price of S$0.30. Of course they may have changed their mind. But this suggests they are optimistic. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. The good news for HG Metal Manufacturing share holders is that insiders were buying at near the current price.

While HG Metal Manufacturing insiders bought shares during the last year, they didn't sell. The chart below shows insider transactions (by companies and 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!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.

Insider Ownership Of HG Metal Manufacturing

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that HG Metal Manufacturing insiders own 30% of the company, worth about S$14m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The HG Metal Manufacturing Insider Transactions Indicate?

The fact that there have been no HG Metal Manufacturing insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. Overall we don't see anything to make us think HG Metal Manufacturing insiders are doubting the company, and they do own shares. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example - HG Metal Manufacturing has 4 warning signs we think you should be aware of.