Simply Wall St.• September 28, 2019
We've lost
count of how many times insiders have accumulated shares in a company that goes
on to improve markedly. On the other hand, we'd be remiss not to mention that insider
sales have been known to precede tough periods for a business. So before you
buy or sell Change Healthcare Inc. (NASDAQ:CHNG), you may well want to know whether insiders have
been buying or selling.
Do Insider
Transactions Matter?
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 equally, we would consider it foolish to
ignore insider transactions altogether. For example, a Harvard University study found that
'insider purchases earn abnormal returns of more than 6% per year.
The Last 12 Months Of
Insider Transactions At Change Healthcare
In the last
twelve months, the biggest single purchase by an insider was when President
Neil de Crescenzo bought US$1.1m worth of shares at a price of US$14.17 per
share. That means that an insider was happy to buy shares at above the current
price of US$11.78. It's very possible they regret the purchase, but it's more
likely they are bullish about the company. We always take careful note of the
price insiders pay when purchasing shares. 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.
While Change
Healthcare insiders bought shares last year, they didn't sell. You can see the
insider transactions (by individuals) over the last year depicted in the chart
below. By clicking on the graph below, you can see the precise details of each
insider transaction!
NasdaqGS:CHNG
Recent Insider Trading, September 28th 2019
There are
always plenty of stocks that insiders are buying. So if that suits your style
you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Change Healthcare
Insiders Bought Stock Recently
Over
the last three months, we've seen significant insider buying at Change
Healthcare. Not only was there no selling that we can see, but they
collectively bought US$2.1m worth of shares. That shows some optimism about the
company's future.
Insider Ownership of
Change Healthcare
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. I reckon it's a good sign if insiders own a
significant number of shares in the company. From our data, it seems that
Change Healthcare insiders own 0.5% of the company, worth about US$7.7m. Whilst
better than nothing, we're not overly impressed by these holdings.
So What Do The Change
Healthcare Insider Transactions Indicate?
It is
good to see recent purchasing. And the longer term insider transactions also
give us confidence. But on the other hand, the company made a loss last year,
which makes us a little cautious. While the overall levels of insider ownership
are below what we'd like to see, the history of transactions imply that Change
Healthcare insiders are reasonably well aligned, and optimistic for the future.
Therefore, you should should definitely take a look at this FREE report showing analyst forecasts
for Change Healthcare.
But
note: Change Healthcare 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.
We aim
to bring you long-term focused research analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company
announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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