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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in UnitedHealth Group Incorporated (NYSE:UNH).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
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. 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.'
UnitedHealth Group Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Lead Independent Director, Richard Burke, sold US$5.3m worth of shares at a price of US$263 per share. That means that an insider was selling shares at around the current price of US$244. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern.
In the last twelve months insiders purchased 26430 shares for US$6.1m. On the other hand they divested 128k shares, for US$33m. Over the last year we saw more insider selling of UnitedHealth Group shares, than buying. You can see a visual depiction of insider transactions (by 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!
I will like UnitedHealth Group better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
UnitedHealth Group Insiders Are Selling The Stock
There was substantially more insider selling, than buying, of UnitedHealth Group shares over the last three months. In total, Richard Burke sold US$7.2m worth of shares in that time. Meanwhile insiders bought US$6.1m worth, as we said above. Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. UnitedHealth Group insiders own about US$1.5b worth of shares (which is 0.6% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Do The UnitedHealth Group Insider Transactions Indicate?
The stark truth for UnitedHealth Group is that there has been more insider selling than insider buying in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. On the plus side, UnitedHealth Group makes money, and is growing profits. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. Of course, the future is what matters most. So if you are interested in UnitedHealth Group, you should check out this free report on analyst forecasts for the company.
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.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.