We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we’ll take a look at 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 would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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.’
Omega Healthcare Investors Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Secretary & COO, Daniel Booth, sold US$1.5m worth of shares at a price of US$36.51 per share. That means that even when the share price was below the current price of US$37.44, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it’s only a weak signal. This single sale was just 17.6% of Daniel Booth’s stake.
All up, insiders sold more shares in Omega Healthcare Investors than they bought, over the last year. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Omega Healthcare Investors Have Sold Stock Recently
There was substantially more insider selling, than buying, of Omega Healthcare Investors shares over the last three months. We note insiders cashed in US$1.6m worth of shares. On the other hand we note Director Burke Whitman bought US$50k worth of shares, as previously mentioned. Because the selling vastly outweighs the buying, we’d say this is a somewhat bearish sign.
Does Omega Healthcare Investors Boast High 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. We usually like to see fairly high levels of insider ownership. Omega Healthcare Investors insiders own 1.5% of the company, currently worth about US$120m 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 Does This Data Suggest About Omega Healthcare Investors Insiders?
Unfortunately, there has been more insider selling of Omega Healthcare Investors stock, than buying, in the last three months. Zooming out, the longer term picture doesn’t give us much comfort. On the plus side, Omega Healthcare Investors makes money, and is growing profits. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn’t make us feel confident about the company. Of course, the future is what matters most. So if you are interested in Omega Healthcare Investors, you should check out this free report on analyst forecasts for the company.
But note: Omega Healthcare Investors may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
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