While it’s been a great week for Xuan Wu Cloud Technology Holdings Limited (HKG:2392) shareholders after stock gained 35%, they should consider it with a grain of salt. Although prices were relatively low, insiders chose to sell CN¥4.7m worth of stock in the past 12 months. This could be a sign of impending weakness.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

See our latest analysis for Xuan Wu Cloud Technology Holdings

Xuan Wu Cloud Technology Holdings Insider Transactions Over The Last Year

The insider, Xiaohu Song, made the biggest insider sale in the last 12 months. That single transaction was for HK$4.7m worth of shares at a price of HK$0.42 each. That means that even when the share price was below the current price of HK$1.19, 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. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 13% of Xiaohu Song's holding. The only individual insider seller over the last year was Xiaohu Song. Notably Xiaohu Song was also the biggest buyer, having purchased HK$488k worth of shares.

You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.

Insider Ownership Of Xuan Wu Cloud Technology Holdings

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Xuan Wu Cloud Technology Holdings insiders own 61% of the company, worth about HK$404m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all 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. 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. When we did our research, we found 3 warning signs for Xuan Wu Cloud Technology Holdings (1 is a bit unpleasant!) that we believe deserve your full attention.

Of course Xuan Wu Cloud Technology Holdings 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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.