We wouldn't blame Merit Medical Systems, Inc. (NASDAQ:MMSI) shareholders if they were a little worried about the fact that Neil Peterson, the Chief Operating Officer recently netted about US$1.8m selling shares at an average price of US$85.00. That diminished their holding by a very significant 68%, which arguably implies a strong desire to reallocate capital.

Merit Medical Systems Insider Transactions Over The Last Year

The insider, Fred Lampropoulos, made the biggest insider sale in the last 12 months. That single transaction was for US$2.2m worth of shares at a price of US$87.31 each. That means that an insider was selling shares at below the current price (US$87.69). 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 2.2% of Fred Lampropoulos's holding.

Over the last year, we can see that insiders have bought 9.38k shares worth US$573k. But insiders sold 86.45k shares worth US$7.3m. Over the last year we saw more insider selling of Merit Medical Systems shares, than buying. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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).

Does Merit Medical Systems Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Merit Medical Systems insiders own about US$121m worth of shares (which is 2.3% of the company). 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 Do The Merit Medical Systems Insider Transactions Indicate?

The stark truth for Merit Medical Systems is that there has been more insider selling than insider buying in the last three months. Zooming out, the longer term picture doesn't give us much comfort. But since Merit Medical Systems is profitable and growing, we're not too worried by this. It is good to see high insider ownership, but the insider selling leaves us cautious. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To assist with this, we've discovered 1 warning sign that you should run your eye over to get a better picture of Merit Medical Systems.

But note: Merit Medical Systems 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.

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.