While AInnovation Technology Group Co., Ltd (HKG:2121) shareholders have enjoyed a good week with stock up 20%, they need remain vigilant. Even though stock prices were relatively low, insiders elected to sell CN¥25m worth of stock in the last year, which could indicate some expected downturn.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

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AInnovation Technology Group Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the CEO & Executive Director, Hui Xu, for HK$22m worth of shares, at about HK$3.06 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of HK$6.80. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 12% of Hui Xu's holding. Notably Hui Xu was also the biggest buyer, having purchased HK$8.8m worth of shares.

In the last twelve months insiders purchased 2.50m shares for HK$8.8m. On the other hand they divested 8.06m shares, for HK$25m. All up, insiders sold more shares in AInnovation Technology Group than they bought, over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Check out our latest analysis for AInnovation Technology Group

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Insider Ownership Of AInnovation Technology Group

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Insiders own 19% of AInnovation Technology Group shares, worth about HK$713m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At AInnovation Technology Group Tell Us?

There haven't been any insider transactions in the last three months -- that doesn't mean much. It's heartening that insiders own plenty of stock, but we'd like to see more insider buying, since the last year of AInnovation Technology Group insider transactions don't fill us with confidence. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. While conducting our analysis, we found that AInnovation Technology Group has 1 warning sign and it would be unwise to ignore this.

But note: AInnovation Technology Group 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.

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 of direct interests only, but not derivative transactions or indirect interests.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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.