On September 8, 2023, Robert Ortenzio, the Executive Chairman of Select Medical Holdings Corp (NYSE:SEM), sold 50,000 shares of the company. This move is part of a larger trend for the insider, who has sold a total of 500,000 shares over the past year and made no purchases.
So, who is Robert Ortenzio? He is a co-founder of Select Medical Holdings Corp and has served as the Executive Chairman since 2005. Under his leadership, the company has grown into a leading provider of specialized health care services across the United States.
Select Medical Holdings Corp operates critical illness recovery hospitals, rehabilitation hospitals, outpatient physical therapy clinics, and occupational health centers. The company's mission is to provide an exceptional patient care experience that promotes healing and recovery in a compassionate environment.
The insider's recent sell has raised some eyebrows, especially considering the company's current valuation. On the day of the sale, shares of Select Medical Holdings Corp were trading at $26.82, giving the company a market cap of $3.364 billion.
The company's price-earnings ratio stands at 16.54, lower than the industry median of 26.74 but higher than the companys historical median price-earnings ratio. This suggests that the stock is relatively undervalued compared to its peers but overvalued based on its own historical standards.
The GuruFocus Value of the company is $30.54, indicating a price-to-GF-Value ratio of 0.88. This means the stock is modestly undervalued based on its GF Value.
The GF Value is an intrinsic value estimate developed by GuruFocus. It is calculated based on historical multiples (price-earnings ratio, price-sales ratio, price-book ratio, and price-to-free cash flow) that the stock has traded at, a GuruFocus adjustment factor based on the companys past returns and growth, and future estimates of business performance from Morningstar analysts.
The insider transaction history for Select Medical Holdings Corp shows a clear trend of selling over the past year, with 9 insider sells and no insider buys.
The insider's recent sell, coupled with the company's modest undervaluation, may suggest that the insider believes the stock is currently overpriced. However, it's important to note that insider selling can occur for a variety of reasons, and it doesn't necessarily indicate a negative outlook for the company.
As always, investors should conduct their own research and consider multiple factors before making investment decisions.
This article first appeared on GuruFocus.