Don't Ignore The Fact That This Insider Just Sold Some Shares In CareTech Holdings PLC (LON:CTH)

Anyone interested in CareTech Holdings PLC (LON:CTH) should probably be aware that the Group Chief Operating Officer, John Ivers, recently divested UK£279k worth of shares in the company, at an average price of UK£4.89 each. That sale was 16% of their holding, so it does make us raise an eyebrow.

See our latest analysis for CareTech Holdings

CareTech Holdings Insider Transactions Over The Last Year

In fact, the recent sale by John Ivers was the biggest sale of CareTech Holdings shares made by an insider individual in the last twelve months, according to our records. So it's clear an insider wanted to take some cash off the table, even slightly below the current price of UK£4.91. 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. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 16% of John Ivers's stake.

The chart below shows insider transactions (by companies and individuals) over the last year. 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 winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Does CareTech Holdings Boast High 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. We usually like to see fairly high levels of insider ownership. It appears that CareTech Holdings insiders own 9.2% of the company, worth about UK£51m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The CareTech Holdings Insider Transactions Indicate?

An insider sold CareTech Holdings shares recently, but they didn't buy any. And there weren't any purchases to give us comfort, over the last year. But since CareTech Holdings is profitable and growing, we're not too worried by this. Insiders own shares, but we're still pretty cautious, given the history of sales. So we'd only buy after careful consideration. While we like knowing 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. At Simply Wall St, we found 2 warning signs for CareTech Holdings that deserve your attention before buying any shares.

But note: CareTech 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, but not derivative transactions.

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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. 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.
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