Insiders sold AU$1.4m worth of Advanced Human Imaging Limited (ASX:AHI) stock last year, could be a warning sign to watch out for

While Advanced Human Imaging Limited (ASX:AHI) shareholders have had a good week with the stock up 17%, they shouldn't let their guards down. The fact that insiders chose to dispose of AU$1.4m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Advanced Human Imaging

Advanced Human Imaging Insider Transactions Over The Last Year

The Non-Executive Director, Nicholas John Prosser, made the biggest insider sale in the last 12 months. That single transaction was for AU$1.4m worth of shares at a price of AU$1.10 each. That means that even when the share price was below the current price of AU$1.30, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. We note that the biggest single sale was only 23% of Nicholas John Prosser's holding. The only individual insider seller over the last year was Nicholas John Prosser.

You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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Insider Ownership of Advanced Human Imaging

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 39% of Advanced Human Imaging shares, worth about AU$69m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At Advanced Human Imaging Tell Us?

It doesn't really mean much that no insider has traded Advanced Human Imaging shares in the last quarter. Still, the insider transactions at Advanced Human Imaging in the last 12 months are not very heartening. The modest level of insider ownership is, at least, some comfort. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Advanced Human Imaging. At Simply Wall St, we've found that Advanced Human Imaging has 4 warning signs (2 are a bit unpleasant!) that deserve your attention before going any further with your analysis.

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, but not derivative transactions.

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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.
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