Should You Take Comfort From Insider Transactions At Universal Health Realty Income Trust (NYSE:UHT)?

By
Simply Wall St
Published
April 06, 2021
NYSE:UHT

It is not uncommon to see companies perform well in the years after insiders buy shares. 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 before you buy or sell Universal Health Realty Income Trust (NYSE:UHT), you may well want to know whether insiders have been buying or selling.

What Is Insider Selling?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, most countries require that the company discloses such transactions to the market.

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. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

View our latest analysis for Universal Health Realty Income Trust

Universal Health Realty Income Trust Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Independent Trustee Michael Domb bought US$145k worth of shares at a price of US$66.00 per share. So it's clear an insider wanted to buy, at around the current price, which is US$70.35. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. The good news for Universal Health Realty Income Trust share holders is that insiders were buying at near the current price.

While Universal Health Realty Income Trust insiders bought shares during the last year, they didn't sell. 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:UHT Insider Trading Volume April 6th 2021

Universal Health Realty Income Trust is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insider Ownership of Universal Health Realty Income Trust

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Universal Health Realty Income Trust insiders own about US$16m worth of shares. That equates to 1.6% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Universal Health Realty Income Trust Tell Us?

It doesn't really mean much that no insider has traded Universal Health Realty Income Trust shares in the last quarter. However, our analysis of transactions over the last year is heartening. Insiders do have a stake in Universal Health Realty Income Trust and their transactions don't cause us concern. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Universal Health Realty Income Trust. Every company has risks, and we've spotted 2 warning signs for Universal Health Realty Income Trust you should know about.

But note: Universal Health Realty Income Trust 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.

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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This article by Simply Wall St is general in nature. 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.
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