As Select Medical Holdings Corporation's (NYSE:SEM)) market cap dropped by US$394m, insiders who sold US$17m worth of stock were able to offset their losses

By
Simply Wall St
Published
November 23, 2021
NYSE:SEM
Source: Shutterstock

Over the past year, insiders sold US$17m worth of Select Medical Holdings Corporation (NYSE:SEM) stock at an average price of US$40.28 per share allowing them to get the most out of their money. After the stock price dropped 8.8% last week, the company's market value declined by US$394m, but insiders were able to mitigate their losses.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Select Medical Holdings

Select Medical Holdings Insider Transactions Over The Last Year

The Executive VP & CFO, Martin Jackson, made the biggest insider sale in the last 12 months. That single transaction was for US$8.0m worth of shares at a price of US$40.19 each. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$30.55. So it may not tell us anything about how insiders feel about the current share price.

Select Medical Holdings insiders didn't buy any shares over the last year. 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!

insider-trading-volume
NYSE:SEM Insider Trading Volume November 23rd 2021

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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. Select Medical Holdings insiders own 21% of the company, currently worth about US$857m based on the recent share price. 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 Select Medical Holdings Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Select Medical Holdings shares in the last quarter. While we feel good about high insider ownership of Select Medical Holdings, we can't say the same about the selling of shares. While we like knowing 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. For example, Select Medical Holdings has 3 warning signs (and 1 which is a bit concerning) we think you should know about.

Of course Select Medical Holdings 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, but not derivative transactions.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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