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Should You Take Comfort From Insider Transactions At Health Insurance Innovations, Inc. (NASDAQ:HIIQ)?

Simply Wall St

We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in Health Insurance Innovations, Inc. (NASDAQ:HIIQ).

Do Insider Transactions Matter?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.

Insider transactions are not the most important thing when it comes to long-term investing. 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.'

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Check out our latest analysis for Health Insurance Innovations

The Last 12 Months Of Insider Transactions At Health Insurance Innovations

Non-Executive Chairman Paul Gabos made the biggest insider purchase in the last 12 months. That single transaction was for US$460k worth of shares at a price of US$30.63 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$23.45). It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for shares is very important. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

Over the last year, we can see that insiders have bought 35500 shares worth US$1.1m. On the other hand they divested 4000 shares, for US$148k. Overall, Health Insurance Innovations insiders were net buyers 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!

NasdaqGM:HIIQ Recent Insider Trading, May 16th 2019

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Health Insurance Innovations Insiders Bought Stock Recently

It's good to see that Health Insurance Innovations insiders have made notable investments in the company's shares. In total, insiders bought US$418k worth of shares in that time, and we didn't record any sales whatsoever. This could be interpreted as suggesting a positive outlook.

Insider Ownership of Health Insurance Innovations

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that Health Insurance Innovations insiders own 8.0% of the company, worth about US$24m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Health Insurance Innovations Insider Transactions Indicate?

It is good to see recent purchasing. We also take confidence from the longer term picture of insider transactions. Given that insiders also own a fair bit of Health Insurance Innovations we think they are probably pretty confident of a bright future. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

Of course Health Insurance Innovations may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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.