Some UnitedHealth Group Incorporated (NYSE:UNH) shareholders may be a little concerned to see that the Non-Executive Chairman, Stephen Hemsley, recently sold a substantial US$25m worth of stock at a price of US$421 per share. However, that sale only accounted for 3.2% of their holding, so arguably it doesn’t say much about their conviction.
The Last 12 Months Of Insider Transactions At UnitedHealth Group
In fact, the recent sale by Non-Executive Chairman Stephen Hemsley was not their only sale of UnitedHealth Group shares this year. They previously made an even bigger sale of -US$32m worth of shares at a price of US$330 per share. That means that an insider was selling shares at slightly below the current price (US$409). We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it’s only a weak signal. This single sale was just 4.5% of Stephen Hemsley’s stake.
Over the last year we saw more insider selling of UnitedHealth Group shares, than buying. 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!
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Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. UnitedHealth Group insiders own 0.5% of the company, currently worth about US$2.0b 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.
What Might The Insider Transactions At UnitedHealth Group Tell Us?
Insiders haven’t bought UnitedHealth Group stock in the last three months, but there was some selling. Zooming out, the longer term picture doesn’t give us much comfort. It is good to see high insider ownership, but the insider selling leaves us cautious. 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. You’d be interested to know, that we found 2 warning signs for UnitedHealth Group and we suggest you have a look.
Of course UnitedHealth Group 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.
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