Select Medical Holdings Insiders Sell US$75m Of Stock, Possibly Signalling Caution

Many Select Medical Holdings Corporation (NYSE:SEM) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

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Select Medical Holdings Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Co-Founder & Executive Chairman, Robert Ortenzio, sold US$74m worth of shares at a price of US$19.55 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The silver lining is that this sell-down took place above the latest price (US$14.79). So it may not tell us anything about how insiders feel about the current share price.

Over the last year we saw more insider selling of Select Medical Holdings shares, than buying. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

Check out our latest analysis for Select Medical Holdings

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).

Select Medical Holdings Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at Select Medical Holdings. Specifically, Independent Director Parvinderjit Khanuja bought US$315k worth of shares in that time, and we didn't record any sales whatsoever. This makes one think the business has some good points.

Insider Ownership Of Select Medical Holdings

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that Select Medical Holdings insiders own 11% of the company, worth about US$213m. 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 Select Medical Holdings Insiders?

It is good to see the recent insider purchase. On the other hand the transaction history, over the last year, isn't so positive. Overall, we'd prefer see a more sustained buying from directors, but with a significant insider holding and more recent purchases, Select Medical Holdings insiders are reasonably well aligned, and optimistic for the future. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Case in point: We've spotted 2 warning signs for Select Medical Holdings you should be aware of, and 1 of these can't be ignored.

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 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.