Meitu Insider Lowered Holding By 50% During Last Year

Insiders were net sellers of Meitu, Inc.'s (HKG:1357 ) stock during the past year. That is, insiders sold more stock than they bought.

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.

View our latest analysis for Meitu

The Last 12 Months Of Insider Transactions At Meitu

In the last twelve months, the biggest single sale by an insider was when the Non-Executive Director, Jiarong Chen, sold HK$69m worth of shares at a price of HK$2.59 per share. That means that an insider was selling shares at slightly below the current price (HK$2.88). 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. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was 50% of Jiarong Chen's holding. Jiarong Chen was the only individual insider to sell shares in the last twelve months.

Jiarong Chen divested 82.22m shares over the last 12 months at an average price of CN¥2.53. 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!

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Insiders At Meitu Have Sold Stock Recently

Over the last three months, we've seen significant insider selling at Meitu. Specifically, Non-Executive Director Jiarong Chen ditched HK$35m 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 Meitu

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. We usually like to see fairly high levels of insider ownership. It's great to see that Meitu insiders own 36% of the company, worth about HK$4.7b. 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 Meitu Insider Transactions Indicate?

An insider sold Meitu shares recently, but they didn't buy any. And our longer term analysis of insider transactions didn't bring confidence, either. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Every company has risks, and we've spotted 2 warning signs for Meitu you should know about.

Of course Meitu 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.

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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.