We often see insiders buying up shares in companies that perform well over the long term. 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 HCA Healthcare, Inc. (NYSE:HCA).
What Is Insider Selling?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
We don’t think shareholders should simply follow insider transactions. 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.’
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HCA Healthcare Insider Transactions Over The Last Year
President of National Group Charles Hall made the biggest insider sale in the last 12 months. That single transaction was for US$3.0m worth of shares at a price of US$101 each. So it’s clear an insider wanted to take some cash off the table, even below the current price of US$129. While sellers have a variety of reasons for selling, this isn’t particularly great to see. As a general rule we consider it to be discouraging when insiders are selling below the current price. It is worth noting that this sale was only 37% of Charles Hall’s holding.
Over the last year we saw more insider selling of HCA Healthcare shares, than buying. The average sell price was around US$110. It’s not too encouraging to see that insiders have sold at below the current price. Since insiders sell for many reasons, we wouldn’t put too much weight on it. 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!
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Insiders at HCA Healthcare Have Sold Stock Recently
The last three months saw significant insider selling at HCA Healthcare. In total, Kathryn Torres dumped US$117k worth of shares in that time, and we didn’t record any purchases whatsoever. In light of this it’s hard to argue that all the directors think that the shares are a bargain.
Does HCA Healthcare Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. HCA Healthcare insiders own 1.6% of the company, currently worth about US$664m based on the recent share price. 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 HCA Healthcare Insiders?
An insider hasn’t bought HCA Healthcare stock in the last three months, but there was some selling. Despite some insider buying, the longer term picture doesn’t make us feel much more positive. On the plus side, HCA Healthcare makes money, and is growing profits. It is good to see high insider ownership, but the insider selling leaves us cautious. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course HCA Healthcare may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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 email@example.com.