Insiders Could Have Profited By Holding onto Guanze Medical Information Industry (Holding) Shares Despite 12% Drop

Guanze Medical Information Industry (Holding) Co., Ltd.'s (HKG:2427) value has fallen 12% in the last week, but insiders who sold CN¥5.8m worth of stock over the last year have had less success. Insiders might have been better off holding onto their shares, given that the average selling price of CN¥0.51 is still below the current share price.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

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Guanze Medical Information Industry (Holding) Insider Transactions Over The Last Year

The CEO & Chairman, Xianzhen Meng, made the biggest insider sale in the last 12 months. That single transaction was for HK$1.0m worth of shares at a price of HK$0.54 each. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is HK$0.29. So it is hard to draw any strong conclusion from it. Xianzhen Meng was the only individual insider to sell over the last year.

Xianzhen Meng ditched 11.53m shares over the year. The average price per share was CN¥0.51. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

See our latest analysis for Guanze Medical Information Industry (Holding)

I will like Guanze Medical Information Industry (Holding) better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. 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's great to see that Guanze Medical Information Industry (Holding) insiders own 74% of the company, worth about HK$207m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The Guanze Medical Information Industry (Holding) Insider Transactions Indicate?

The fact that there have been no Guanze Medical Information Industry (Holding) insider transactions recently certainly doesn't bother us. It's heartening that insiders own plenty of stock, but we'd like to see more insider buying, since the last year of Guanze Medical Information Industry (Holding) insider transactions don't fill us with confidence. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Guanze Medical Information Industry (Holding). Be aware that Guanze Medical Information Industry (Holding) is showing 3 warning signs in our investment analysis , and 1 of those doesn't sit too well with us...

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.

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