We often see insiders buying up shares in companies that perform well over the long term. 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 U.S. Physical Therapy, Inc. (NYSE:USPH).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
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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The Last 12 Months Of Insider Transactions At U.S. Physical Therapy
Over the last year, we can see that the biggest insider sale was by President Christopher Reading for US$2.3m worth of shares, at about US$92.16 per share. That means that an insider was selling shares at slightly below the current price (US$109). Even though it doesn’t necessarily mean anything, that’s certainly not a positive sign, in our book. We generally consider it a negative if insiders have been selling on market, especially if they did so below the current price. Please note, however, that this single sale was just 24.2% of Christopher Reading’s stake.
Over the last year, we can see that insiders have bought 1.70k shares worth US$183k. But insiders sold 103.83k shares worth US$10m. In total, U.S. Physical Therapy insiders sold more than they bought over the last year. They sold for an average price of about US$98.23. It’s not particularly great to see insiders were selling shares at below recent prices. Of course, the sales could be motivated for a multitude of reasons, so we shouldn’t jump to conclusions. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
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U.S. Physical Therapy Insiders Are Selling The Stock
There was substantially more insider selling, than buying, of U.S. Physical Therapy shares over the last three months. In that time, insiders dumped US$638k worth of shares. On the other hand we note insiders bought US$183k worth of shares, as previously mentioned. Since the selling really does outweigh the buying, we’d say that these transactions may suggest that some insiders feel the shares are not cheap.
For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. It appears that U.S. Physical Therapy insiders own 2.1% of the company, worth about US$29m. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Does This Data Suggest About U.S. Physical Therapy Insiders?
The stark truth for U.S. Physical Therapy is that there has been more insider selling than insider buying in the last three months. Despite some insider buying, the longer term picture doesn’t make us feel much more positive. Insiders own shares, but we’re still pretty cautious, given the history of sales. We’d think twice before buying! Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for U.S. Physical Therapy.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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 email@example.com.