We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 Inovalon Holdings, Inc. (NASDAQ:INOV).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
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.’
The Last 12 Months Of Insider Transactions At Inovalon Holdings
In the last twelve months, the biggest single purchase by an insider was when CEO & Chairman Keith Dunleavy bought US$1.2m worth of shares at a price of US$9.97 per share. We do like to see buying, but this purchase was at a lower price. The insider buying may not tell us much about how insiders feel about the current share price.
In the last twelve months insiders paid US$1.5m for 148.00k shares purchased. In the last twelve months there was more buying than selling by Inovalon Holdings insiders. The average buy price was around US$10.11. It is certainly positive to see that insiders have invested their own money in the company. But we must note that the investments were made at well below today’s share price. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
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. It’s great to see that Inovalon Holdings insiders own 15% of the company, worth about US$302m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The Inovalon Holdings Insider Transactions Indicate?
It doesn’t really mean much that no insider has traded Inovalon Holdings shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. It would be great to see more insider buying, but overall it seems like Inovalon Holdings insiders are reasonably well aligned (owning significant chunk of the company’s shares) and optimistic for the future. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Inovalon Holdings.
Of course Inovalon Holdings may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.