It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Inovalon Holdings Inc (NASDAQ:INOV).
What Is Insider Buying?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, including certain disclosures.
We don’t think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Colombia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
The Last 12 Months Of Insider Transactions At Inovalon Holdings
Chairman & CEO Keith Dunleavy made the biggest insider purchase in the last 12 months. That single transaction was for US$1.2m worth of shares at a price of US$9.97 each. That means that an insider was happy to buy shares at around the current price. Of course they may have changed their mind. But this suggests they are optimistic. Nonetheless, we consider it positive if insiders want to buy at around the current share price.
In the last twelve months insiders purchased 148.00k shares for US$1.5m. On the other hand they divested 35.63k shares, for US$550k. Overall, Inovalon Holdings insiders were net buyers last year. Their average price was about US$10.11. Although they bought at below the recent price of US$11.18 per share, it is good to see that insiders are willing to invest in the company. The chart below shows insider transactions over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Insiders at Inovalon Holdings Have Bought Stock Recently
Over the last three months, we’ve seen significant insider buying at Inovalon Holdings. Chief Operating Officer Jason Capitel spent US$221k on stock, and there wasn’t any selling. This makes one think the business has some good points.
Does Inovalon 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. I reckon it’s a good sign if insiders own a significant number of shares in the company. Inovalon Holdings insiders own about US$871m worth of shares (which is 51% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Does This Data Suggest About Inovalon Holdings Insiders?
It’s certainly positive to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss last year, which makes us a little cautious. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Inovalon Holdings. One for the watchlist, at least! Of course, the future is what matters most. So if you are interested in Inovalon Holdings, you should check out this free report on analyst forecasts for the company.
But note: Inovalon 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.
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 firstname.lastname@example.org.