Viewing insider transactions for Encompass Health Corporation's (NYSE:EHC ) over the last year, we see that insiders were net sellers. This means that a larger number of shares were sold by insiders in relation to shares purchased.
Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.
Encompass Health Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Chief Medical Officer, Elissa Charbonneau, sold US$850k worth of shares at a price of US$85.02 per share. That means that an insider was selling shares at below the current price (US$85.38). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 35% of Elissa Charbonneau's stake. The only individual insider seller over the last year was Elissa Charbonneau.
Elissa Charbonneau sold a total of 18.29k shares over the year at an average price of US$78.02. You can see the insider transactions (by companies and 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!
I will like Encompass Health better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.
Encompass Health Insiders Are Selling The Stock
There was substantially more insider selling, than buying, of Encompass Health shares over the last three months. In total, Chief Medical Officer Elissa Charbonneau sold US$850k worth of shares in that time. Meanwhile Independent Chairman Gregory Carmichael bought US$167k worth , as we said above . Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.
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. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that Encompass Health insiders own 1.3% of the company, worth about US$108m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Do The Encompass Health Insider Transactions Indicate?
The insider sales have outweighed the insider buying, at Encompass Health, in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. But since Encompass Health is profitable and growing, we're not too worried by this. 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. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. To assist with this, we've discovered 2 warning signs that you should run your eye over to get a better picture of Encompass Health.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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 of direct interests only, but not derivative transactions or indirect interests.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.