Xuan Wu Cloud Technology Holdings Insiders Made A Wise Decision By Selling CN¥4.7m Worth Of Stock

Despite a 32% gain in Xuan Wu Cloud Technology Holdings Limited's (HKG:2392) stock price this week, shareholders shouldn't let up. The fact that insiders chose to dispose of CN¥4.7m 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, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for Xuan Wu Cloud Technology Holdings

Xuan Wu Cloud Technology Holdings Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the insider, Xiaohu Song, for HK$4.7m worth of shares, at about HK$0.42 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of HK$0.79. 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 13% of Xiaohu Song's holding. Xiaohu Song was the only individual insider to sell over the last year. Notably Xiaohu Song was also the biggest buyer, having purchased HK$488k worth of shares.

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!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).

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. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that Xuan Wu Cloud Technology Holdings insiders own 61% of the company, worth about HK$268m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

What Might The Insider Transactions At Xuan Wu Cloud Technology Holdings Tell Us?

It doesn't really mean much that no insider has traded Xuan Wu Cloud Technology Holdings shares in the last quarter. It's heartening that insiders own plenty of stock, but we'd like to see more insider buying, since the last year of Xuan Wu Cloud Technology Holdings insider transactions don't fill us with confidence. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Case in point: We've spotted 2 warning signs for Xuan Wu Cloud Technology Holdings you should be aware of, and 1 of these is potentially serious.

But note: Xuan Wu Cloud Technology Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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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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.