Despite a 14% gain in Meihao Medical Group Co., Ltd's (HKG:1947) stock price this week, shareholders shouldn't let up. In spite of the relatively cheap prices, insiders made the decision to sell CN¥15m worth of stock in the last 12 months. This could be a warning indicator of vulnerabilities in the future.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

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The Last 12 Months Of Insider Transactions At Meihao Medical Group

Over the last year, we can see that the biggest insider sale was by the Co-Founder, Xiaomin Wang, for HK$15m worth of shares, at about HK$0.27 per share. That means that even when the share price was below the current price of HK$0.32, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 14% of Xiaomin Wang's stake. The only individual insider seller over the last year was Xiaomin Wang.

You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

See our latest analysis for Meihao Medical Group

If you are like me, then you will not want to miss this free list of small cap stocks that are not only being bought by insiders but also have attractive valuations.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Meihao Medical Group insiders own about HK$119m worth of shares (which is 62% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About Meihao Medical Group Insiders?

It doesn't really mean much that no insider has traded Meihao Medical Group shares in the last quarter. While we feel good about high insider ownership of Meihao Medical Group, we can't say the same about the selling of 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. To help with this, we've discovered 2 warning signs (1 is a bit unpleasant!) that you ought to be aware of before buying any shares in Meihao Medical Group.

Of course Meihao Medical Group may not be the best stock to buy. So you may wish to see this free collection of high quality 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 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.