SoftMedx Healthcare Insiders Got A Good Deal Selling At HK$0.01

While it’s been a great week for SoftMedx Healthcare Limited (HKG:648) shareholders after stock gained 18%, they should consider it with a grain of salt. The fact that insiders chose to dispose of HK$2.1m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.

Although we don't think shareholders should simply follow insider transactions, 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 SoftMedx Healthcare

Over the last year, we can see that the biggest insider sale was by the insider, Jie Huang, for HK$2.1m worth of shares, at about HK$0.01 per share. That means that even when the share price was below the current price of HK$0.24, an insider wanted to cash in some shares. 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was just 12% of Jie Huang's stake. The only individual insider seller over the last year was Jie Huang.

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

See our latest analysis for SoftMedx Healthcare

I will like SoftMedx Healthcare 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.

SoftMedx Healthcare Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at SoftMedx Healthcare. Specifically, insider Jie Huang ditched HK$2.1m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

Insider Ownership Of SoftMedx Healthcare

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. SoftMedx Healthcare insiders own about HK$387m worth of shares (which is 75% 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 SoftMedx Healthcare Insiders?

An insider hasn't bought SoftMedx Healthcare stock in the last three months, but there was some selling. And even if we look at the last year, we didn't see any purchases. On the plus side, SoftMedx Healthcare makes money, and is growing profits. It is good to see high insider ownership, but the insider selling leaves us cautious. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing SoftMedx Healthcare. Every company has risks, and we've spotted 5 warning signs for SoftMedx Healthcare (of which 1 shouldn't be ignored!) you should know about.

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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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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.