We'd be surprised if eHealth, Inc. (NASDAQ:EHTH) shareholders haven't noticed that the Lead Independent Director, Jack Oliver, recently sold US$303k worth of stock at US$74.41 per share. That sale was 11% of their holding, so it does make us raise an eyebrow.
The Last 12 Months Of Insider Transactions At eHealth
In the last twelve months, the biggest single purchase by an insider was when CEO & Director Scott Flanders bought US$3.6m worth of shares at a price of US$73.90 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$67.11). It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
Over the last year, we can see that insiders have bought 52.95k shares worth US$3.8m. But they sold 39.06k shares for US$4.7m. In total, eHealth insiders sold more than they bought over the last year. You can see the insider transactions (by companies and 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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Insider Ownership of eHealth
Many investors like to check how much of a company is owned by 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. Insiders own 4.5% of eHealth shares, worth about US$77m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At eHealth Tell Us?
The recent insider purchases are heartening. On the other hand the transaction history, over the last year, isn't so positive. While recent transactions indicate confidence in eHealth, insiders don't own enough of the company to overcome our cautiousness about the longer term transactions. Overall they seem reasonably aligned. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 3 warning signs for eHealth you should be aware of, and 1 of these makes us a bit uncomfortable.
Of course eHealth 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.
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