Stock Analysis

Have Insiders Been Selling Omega Healthcare Investors, Inc. (NYSE:OHI) Shares?

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NYSE:OHI
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We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Omega Healthcare Investors, Inc. (NYSE:OHI).

What Is Insider Buying?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.

We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

See our latest analysis for Omega Healthcare Investors

The Last 12 Months Of Insider Transactions At Omega Healthcare Investors

In the last twelve months, the biggest single sale by an insider was when the CEO & Director, C. Pickett, sold US$2.4m worth of shares at a price of US$44.55 per share. So what is clear is that an insider saw fit to sell at around the current price of US$37.28. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive).

In the last twelve months insiders purchased 9.80k shares for US$225k. But they sold 103.96k shares for US$4.5m. In total, Omega Healthcare Investors insiders sold more than they bought over the last year. The sellers received a price of around US$43.76, on average. It's not too encouraging to see that insiders have sold at below the current price. Of course, the sales could be motivated for a multitude of reasons, so we shouldn't jump to conclusions. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
NYSE:OHI Insider Trading Volume December 21st 2020

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Omega Healthcare Investors insiders own 0.5% of the company, worth about US$44m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The Omega Healthcare Investors Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Omega Healthcare Investors shares in the last quarter. Our analysis of Omega Healthcare Investors insider transactions leaves us cautious. But we do like the fact that insiders own a fair chunk of the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Omega Healthcare Investors. Be aware that Omega Healthcare Investors is showing 5 warning signs in our investment analysis, and 1 of those is a bit concerning...

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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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What are the risks and opportunities for Omega Healthcare Investors?

Omega is a real estate investment trust that invests in the long-term healthcare industry, primarily in skilled nursing and assisted living facilities.

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Rewards

  • Trading at 34.9% below our estimate of its fair value

  • Earnings have grown 19.3% per year over the past 5 years

Risks

  • Earnings are forecast to decline by an average of 6.7% per year for the next 3 years

  • Interest payments are not well covered by earnings

  • Large one-off items impacting financial results

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