Have Insiders Been Selling Cochlear Limited (ASX:COH) Shares This Year?
We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Cochlear Limited (ASX:COH), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. 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 equally, we would consider it foolish to ignore insider transactions altogether. 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.’
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The Last 12 Months Of Insider Transactions At Cochlear
In the last twelve months, the biggest single sale by an insider was when CEO, MD Diggory Howitt sold AU$876k worth of shares at a price of AU$175 per share. So it’s clear an insider wanted to take some cash off the table, even below the current price of AU$186. 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. It is worth noting that this sale was only 13.8% of Diggory Howitt’s holding. Diggory Howitt was the only individual insider to sell over the last year.
The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Insiders at Cochlear Have Sold Stock Recently
We’ve seen more insider selling than insider buying at Cochlear recently. We note Diggory Howitt cashed in AU$876k worth of shares. On the other hand we note Non-Executive Director Bruce Robinson bought AU$149k worth of shares. Because the selling vastly outweighs the buying, we’d say this is a somewhat bearish sign.
Insider Ownership of Cochlear
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Cochlear insiders own 0.4% of the company, worth about AU$45m. 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 Cochlear Insider Transactions Indicate?
The insider sales have outweighed the insider buying, at Cochlear, in the last three months. Despite some insider buying, the longer term picture doesn’t make us feel much more positive. On the plus side, Cochlear makes money, and is growing profits. Insider ownership isn’t particularly high, so this analysis makes us cautious about the company. So we’d only buy after careful consideration. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Cochlear.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity 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 editorial-team@simplywallst.com.
