It is not uncommon to see companies perform well in the years after insiders buy shares. 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 Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC).
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, rules govern insider transactions, and certain disclosures are required.
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. 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.’
Tabula Rasa HealthCare Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by Glen Bressner for US$2.6m worth of shares, at about US$50.89 per share. That means that even when the share price was below the current price of US$64.07, an insider wanted to cash in some shares. While sellers have a variety of reasons for selling, this isn’t particularly great to see. When an insider sells below the current price, it does tend to make us wonder about the current valuation. We note that the biggest single sale was only 39.4% of Glen Bressner’s holding.
All up, insiders sold more shares in Tabula Rasa HealthCare than they bought, over the last year. They sold for an average price of about US$50.55. It’s not particularly great to see insiders were selling shares around current prices. While some insiders have decided to take some money off the table, we wouldn’t put too much weight on this fact. You can see the insider transactions over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Insiders at Tabula Rasa HealthCare Have Bought Stock Recently
At Tabula Rasa HealthCare,over the last quarter, we have observed quite a lot more insider buying than insider selling. We can see that Calvin Knowlton paid US$488k for shares in the company. But we did see Independent Director Samira Beckwith sell shares worth US$131k. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.
Insider Ownership of Tabula Rasa HealthCare
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. Tabula Rasa HealthCare insiders own 11% of the company, currently worth about US$147m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Does This Data Suggest About Tabula Rasa HealthCare Insiders?
The recent insider purchase is heartening. However, the longer term transactions are not so encouraging. The high levels of insider ownership, and the recent buying by an insider, suggests they are well aligned and optimistic. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Tabula Rasa HealthCare.
But note: Tabula Rasa HealthCare 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.