Should You Take Comfort From Insider Transactions At Fisher & Paykel Healthcare Corporation Limited (NZSE:FPH)?

We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we’ll take a look at whether insiders have been buying or selling shares in Fisher & Paykel Healthcare Corporation Limited (NZSE:FPH).

What Is Insider Selling?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, rules govern insider transactions, and certain disclosures are required.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’

Check out our latest analysis for Fisher & Paykel Healthcare

Fisher & Paykel Healthcare Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Non-Executive Director Michael Daniell bought NZ$1.5m worth of shares at a price of NZ$14.89 per share. That means that an insider was happy to buy shares at above the current price. It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. It’s not at all bad to see insiders buy shares at or above current prices. Notably Michael Daniell was also the biggest seller, having sold NZ$1.9m worth of shares.

In the last twelve months insiders purchased 137.16k shares for NZ$2.0m. But insiders sold 128.00k shares worth NZ$1.9m. Overall, Fisher & Paykel Healthcare insiders were net buyers last year. The average buy price was around NZ$14.68. These transactions suggest that insiders have considered the current price of NZ$13.25 attractive. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

NZSE:FPH Insider Trading January 7th 19
NZSE:FPH Insider Trading January 7th 19

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Does Fisher & Paykel Healthcare 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 0.4% of Fisher & Paykel Healthcare shares, worth about NZ$31m. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.

So What Does This Data Suggest About Fisher & Paykel Healthcare Insiders?

It doesn’t really mean much that no insider has traded Fisher & Paykel Healthcare shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Insiders own shares in Fisher & Paykel Healthcare and we see no evidence to suggest they are worried about the future. Of course, the future is what matters most. So if you are interested in Fisher & Paykel Healthcare, you should check out this free report on analyst forecasts for the company.

If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.