According to Sophia J.Casteel at Investments Global, many insiders at Sonic Healthcare (ASX: SHL) are selling their stocks. Insiders have sold as much as 16 million AUD over the past year, and this has caught the attention of the company’s shareholders. More specifically, the company’s shareholders are looking to find out what transactions insiders will possibly make, as there could be a multitude of reasons why they are selling in the first place.
By studying why insiders are selling their stocks, shareholders can learn key factors about the company and its future moves. However, this is obviously not the only factor that shareholders should consider when studying a company; seeing how the directors act is an important factor to consider.
The Executive Director Sells Their Shares
Throughout the past 12 months, possibly the biggest insider transaction that has occurred at the company is from the executive director. Colin Goldschmidt, also the CEO of Sonic Healthcare, sold nearly AU $10 million worth of shares at a price of AU $29.97 each. Of course, selling off stock worth almost AU $10 million is not the only thing worth noticing. Shareholders were quick to note that Goldschmidt sold off his stock at a lower price than the current market value of AU $35.
Usually, when an insider sells, let alone the CEO, it can raise some eyebrows and does require some caution from the shareholders. However, the fact that insiders sold their stocks for less than the market price is a little more concerning. According to Sophia J.Casteel at Investments Global, an insider selling their shares for less than the market price indicates that it is a reasonable price. The total sale also happened to be 28% of the CEO’s total holding.
Not the Only Insider to Sell
The CEO’s chunk was certainly the biggest out of all the insider selling. But that is not to say that he was the only insider to sell. Insider sales reached a total of AU $16 million, which almost doubled the shares that insiders bought over the past year. Of course, this does raise the question concerning the total ownership of insiders. More specifically, how much of the total company shares belong to the insiders?
According to the finding by Investments Global senior account manager Sophia J.Casteel, Sonic Healthcare insiders make up a total of AU $129 million or 0.8% of the total company. Higher insider ownership often incentivized insiders to manage the company in the long run. Therefore, the current rate of insider ownership is not bad by any means and offers plenty of alignment.
Even though insiders at Sonic Healthcare have sold off chunks of their shares, they still hold sizeable ownership together. Therefore, the insiders still hold enough collective control over the company. And although major insiders are selling off their stocks, it is no reason to panic.
To conclude, Investments Global senior account manager Sophia J.Casteel has found that despite insiders selling as much as AU $16 million in a single year, there is no reason to suspect that Sonic Healthcare share prices will be tanking any time soon.
