It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So we'll take a look at whether insiders have been buying or selling shares in Estia Health Limited (ASX:EHE).
What Is Insider Selling?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
Check out our latest analysis for Estia Health
Estia Health Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when CEO & MD Ian Thorley bought AU$121k worth of shares at a price of AU$2.42 per share. That implies that an insider found the current (approximate) price enticing. That means they have been optimistic about the company in the past, though they may have changed their mind. In any event it's generally a positive if insiders are buying shares at around the current price.
Over the last year, we can see that insiders have bought 68.33k shares worth AU$170k. In total, Estia Health insiders bought more than they sold over the last year. They paid about AU$2.49 on average. It's great to see insiders putting their own cash into the company's stock, albeit at below the recent share price (AU$2.55). You can see a visual depiction of insider transactions (by 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!
Estia Health is not the only stock that insiders are buying. For those who like to find winning investments this freelist of growing companies with recent insider purchasing, could be just the ticket.
Insiders at Estia Health Have Bought Stock Recently
It's good to see that Estia Health insiders have made notable investments in the company's shares. Not only was there no selling that we can see, but they collectively bought AU$141k worth of shares. This could be interpreted as suggesting a positive outlook.
Insider Ownership of Estia Health
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. Insiders own 4.6% of Estia Health shares, worth about AU$32m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Do The Estia Health Insider Transactions Indicate?
It's certainly positive to see the recent insider purchases. And an analysis of the transactions over the last year also gives us confidence. Given that insiders also own a fair bit of Estia Health we think they are probably pretty confident of a bright future. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this freereport showing analyst forecasts for its future.
But note: Estia Health may not be the best stock to buy. So take a peek at this freelist of interesting companies with high ROE and low debt.
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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.