We wouldn't blame Sonic Healthcare Limited (ASX:SHL) shareholders if they were a little worried about the fact that Colin Goldschmidt, the CEO, MD & Executive Director recently netted about AU$6.9m selling shares at an average price of AU$27.53. That's a big dump, and it decreased their holding size by 26%, which is notable but not too bad.
The Last 12 Months Of Insider Transactions At Sonic Healthcare
Notably, that recent sale by CEO, MD & Executive Director Colin Goldschmidt was not the only time they sold Sonic Healthcare shares this year. Earlier in the year, they fetched AU$27.53 per share in a -AU$6.9m sale. That means that even when the share price was below the current price of AU$28.40, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. 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. It is worth noting that this sale was only 26% of Colin Goldschmidt's holding.
Over the last year, we can see that insiders have bought 5230 shares worth AU$130k. But insiders sold 370000 shares worth AU$10m. Over the last year we saw more insider selling of Sonic Healthcare shares, than buying. You can see the insider transactions (by individuals) over the last year depicted in the chart 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 Sonic Healthcare better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Does Sonic Healthcare Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. 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 Sonic Healthcare insiders own 0.8% of the company, worth about AU$108m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Sonic Healthcare Tell Us?
Insiders haven't bought Sonic Healthcare stock in the last three months, but there was some selling. Zooming out, the longer term picture doesn't give us much comfort. On the plus side, Sonic Healthcare makes money, and is growing profits. It is good to see high insider ownership, but the insider selling leaves us cautious. 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, 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, but not derivative transactions.
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