When a single insider purchases stock, it is typically not a major deal. However, when multiple insiders purchase stock, like in Custom Health Holdings Inc.'s (TSE:CHLT) instance, it's good news for shareholders.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
The Last 12 Months Of Insider Transactions At Custom Health Holdings
The insider Kevin Knight made the biggest insider purchase in the last 12 months. That single transaction was for CA$83k worth of shares at a price of CA$7.31 each. That means that an insider was happy to buy shares at above the current price of CA$6.85. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
In the last twelve months insiders purchased 41.45k shares for CA$297k. But insiders sold 4.00k shares worth CA$29k. Overall, Custom Health Holdings insiders were net buyers during the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
See our latest analysis for Custom Health Holdings
Custom Health Holdings is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.
Insiders At Custom Health Holdings Have Bought Stock Recently
Over the last three months, we've seen significantly more insider buying, than insider selling, at Custom Health Holdings. Insiders spent CA$218k on shares. But insider Andrew Aertker sold shares worth CA$29k. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.
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. 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 Custom Health Holdings insiders own 39% of the company, worth about CA$74m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Do The Custom Health Holdings Insider Transactions Indicate?
It is good to see recent purchasing. And the longer term insider transactions also give us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. Given that insiders also own a fair bit of Custom Health Holdings we think they are probably pretty confident of a bright future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Custom Health Holdings. For instance, we've identified 2 warning signs for Custom Health Holdings (1 doesn't sit too well with us) you should be aware of.
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 of direct interests only, but not derivative transactions or indirect interests.
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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.