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Should You Be Worried About Insider Transactions At Healthcare Services Group, Inc. (NASDAQ:HCSG)?

Simply Wall St

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 we'll take a look at whether insiders have been buying or selling shares in Healthcare Services Group, Inc. (NASDAQ:HCSG).

What Is Insider Buying?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

See our latest analysis for Healthcare Services Group

The Last 12 Months Of Insider Transactions At Healthcare Services Group

Over the last year, we can see that the biggest insider sale was by the Independent Director, Robert Frome, for US$205k worth of shares, at about US$24.06 per share. So what is clear is that an insider saw fit to sell at around the current price of US$23.81. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive). Robert Frome was the only individual insider to sell over the last year.

Robert Frome sold a total of 10594 shares over the year at an average price of US$25.90. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

NasdaqGS:HCSG Recent Insider Trading, September 25th 2019

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insiders at Healthcare Services Group Have Sold Stock Recently

Over the last three months, we've seen significant insider selling at Healthcare Services Group. In total, Independent Director Robert Frome dumped US$205k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. From our data, it seems that Healthcare Services Group insiders own 0.5% of the company, worth about US$9.4m. Whilst better than nothing, we're not overly impressed by these holdings.

So What Does This Data Suggest About Healthcare Services Group Insiders?

An insider sold stock recently, but they haven't been buying. And even if we look to the last year, we didn't see any purchases. But it is good to see that Healthcare Services Group is growing earnings. When you combine this with the relatively low insider ownership, we are very cautious about the stock. So we're not rushing to buy, to say the least. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Healthcare Services Group.

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.