It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we’ll take a look at whether insiders have been buying or selling shares in OrthoPediatrics Corp. (NASDAQ:KIDS).
What Is Insider Selling?
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.
We don’t think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
OrthoPediatrics Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when Executive Vice President of Commercialization Gregory Odle sold US$594k worth of shares at a price of US$17.92 per share. That means that an insider was selling shares at below the current price (US$34.22). While sellers have a variety of reasons for selling, this isn’t particularly great to see. As a general rule we consider it to be discouraging when insiders are selling below the current price. It is worth noting that this sale was only 28.9% of Gregory Odle’s holding.
Over the last year, we can see that insiders have bought 6.75k shares worth US$124k. But insiders sold 132.36k shares worth US$2.4m. All up, insiders sold more shares in OrthoPediatrics than they bought, over the last year. The sellers received a price of around US$18.01, on average. We don’t gain confidence from insider selling below the recent share price. Since insiders sell for many reasons, we wouldn’t put too much weight on it. The chart below shows insider transactions over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Does OrthoPediatrics Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company 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’s great to see that OrthoPediatrics insiders own 3.7% of the company, worth about US$18m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
What Might The Insider Transactions At OrthoPediatrics Tell Us?
It doesn’t really mean much that no insider has traded OrthoPediatrics shares in the last quarter. The insider transactions at OrthoPediatrics are not very heartening. But it’s good to see that insiders own shares in the company. Of course, the future is what matters most. So if you are interested in OrthoPediatrics, you should check out this free report on analyst forecasts for the company.
But note: OrthoPediatrics 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.