Possible Bearish Signals With Fisher & Paykel Healthcare Insiders Disposing Stock
Over the past year, many Fisher & Paykel Healthcare Corporation Limited (NZSE:FPH) insiders sold a significant stake in the company which may have piqued investors' interest. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.
Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.
The Last 12 Months Of Insider Transactions At Fisher & Paykel Healthcare
In the last twelve months, the biggest single sale by an insider was when the MD, CEO & Executive Director, Lewis Gradon, sold NZ$2.3m worth of shares at a price of NZ$45.20 per share. That means that even when the share price was below the current price of NZ$46.13, an insider wanted to cash in some shares. 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 8.2% of Lewis Gradon's stake.
Over the last year, we can see that insiders have bought 5.25k shares worth NZ$232k. But they sold 81.65k shares for NZ$3.5m. In total, Fisher & Paykel Healthcare insiders sold more than they bought over the last year. 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!
Check out our latest analysis for Fisher & Paykel Healthcare
If you are like me, then you will not want to miss this free list of small cap stocks that are not only being bought by insiders but also have attractive valuations.
Fisher & Paykel Healthcare Insiders Are Selling The Stock
Over the last three months, we've seen notably more insider selling, than insider buying, at Fisher & Paykel Healthcare. In total, insiders sold NZ$2.5m worth of shares in that time. Meanwhile insiders bought NZ$228k worth. Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.
Insider Ownership Of Fisher & Paykel Healthcare
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. Fisher & Paykel Healthcare insiders own about NZ$90m worth of shares. That equates to 0.3% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Fisher & Paykel Healthcare Tell Us?
Unfortunately, there has been more insider selling of Fisher & Paykel Healthcare stock, than buying, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. But since Fisher & Paykel Healthcare is profitable and growing, we're not too worried by this. While insiders do own shares, they don't own a heap, and they have been selling. So we'd only buy after careful consideration. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Fisher & Paykel Healthcare. You'd be interested to know, that we found 1 warning sign for Fisher & Paykel Healthcare and we suggest you have a look.
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 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.