This Encompass Health Insider Reduced Their Stake By 35%

Insiders were net sellers of Encompass Health Corporation's (NYSE:EHC ) stock during the past year. That is, insiders sold more stock than they bought.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for Encompass Health

Encompass Health Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Chief Medical Officer, Elissa Charbonneau, sold US$850k worth of shares at a price of US$85.02 per share. That means that an insider was selling shares at slightly below the current price (US$98.93). 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 35% of Elissa Charbonneau's holding. The only individual insider seller over the last year was Elissa Charbonneau.

You can see the insider transactions (by companies and 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!

I will like Encompass Health better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. It's great to see that Encompass Health insiders own 1.3% of the company, worth about US$127m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At Encompass Health Tell Us?

It doesn't really mean much that no insider has traded Encompass Health shares in the last quarter. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the Encompass Health insiders selling. While it's good to be aware of 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. Every company has risks, and we've spotted 1 warning sign for Encompass Health you should know about.

Of course Encompass Health may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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 of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.