We wouldn't blame ResMed Inc. (NYSE:RMD) shareholders if they were a little worried about the fact that Justin Leong, the Chief Product Officer recently netted about US$10m selling shares at an average price of US$217. Probably the most concerning element of the whole transaction is that the disposal amounted to 72% of their entire holding.

The Last 12 Months Of Insider Transactions At ResMed

Notably, that recent sale by Justin Leong is the biggest insider sale of ResMed shares that we've seen in the last year. So it's clear an insider wanted to take some cash off the table, even slightly below the current price of US$220. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was 72% of Justin Leong's holding.

In the last year ResMed insiders didn't buy any company stock. 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!

I will like ResMed 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.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. ResMed insiders own 0.7% of the company, currently worth about US$236m based on the recent share price. 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 ResMed Insiders?

An insider hasn't bought ResMed stock in the last three months, but there was some selling. And there weren't any purchases to give us comfort, over the last year. But it is good to see that ResMed is growing earnings. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. 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. At Simply Wall St, we found 1 warning sign for ResMed that deserve your attention before buying any shares.

Of course ResMed 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.