Healthcare News

Insiders at Sonic Healthcare Limited (ASX:SHL) sold AU$16m worth of stock, possibly indicating weakness in the future

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Many Sonic Healthcare Limited (ASX:SHL) insiders ditched their stock over the past year, which may be of interest to the company’s shareholders. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Sonic Healthcare

Sonic Healthcare Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the CEO, MD & Executive Director, Colin Goldschmidt, for AU$9.9m worth of shares, at about AU$29.97 per share. That means that an insider was selling shares at below the current price (AU$29.97). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don’t know for sure what they think of the stock price. We note that the biggest single sale was only 28% of Colin Goldschmidt’s holding.

Over the last year, we can see that insiders have bought 8.56k shares worth AU$258k. But insiders sold 531.55k shares worth AU$16m. In total, Sonic Healthcare insiders sold more than they bought over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
ASX:SHL Insider Trading Volume January 1st 2023

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

Insiders At Sonic Healthcare Have Bought Stock Recently

There was some insider buying at Sonic Healthcare over the last quarter. Independent Non-Executive Director Katharine Giles purchased AU$32k worth of shares in that period. It’s great to see that insiders are only buying, not selling. But the amount invested in the last three months isn’t enough for us too put much weight on it, as a single factor.

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Insiders own 0.7% of Sonic Healthcare shares, worth about AU$106m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Sonic Healthcare Tell Us?

Our data shows a little insider buying, but no selling, in the last three months. The net investment is not enough to encourage us much. It’s heartening that insiders own plenty of stock, but we’d like to see more insider buying, since the last year of Sonic Healthcare insider transactions don’t fill us with confidence. While we like knowing what’s going on with the insider’s ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Case in point: We’ve spotted 1 warning sign for Sonic Healthcare you should be aware of.

Of course Sonic Healthcare may not be the best stock to buy. So you may wish to see this free collection of high quality 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.

Valuation is complex, but we’re helping make it simple.

Find out whether Sonic Healthcare is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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