Read This Before Selling Elanco Animal Health Incorporated (NYSE:ELAN) Shares
We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Elanco Animal Health Incorporated (NYSE:ELAN).
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the 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 it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
Check out our latest analysis for Elanco Animal Health
The Last 12 Months Of Insider Transactions At Elanco Animal Health
In the last twelve months, the biggest single purchase by an insider was when Independent Chairman of the Board Roy Hoover bought US$284k worth of shares at a price of US$28.62 per share. We do like to see buying, but this purchase was made at well below the current price of US$32.31. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.
Elanco Animal Health insiders may have bought shares in the last year, but they didn't sell any. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Elanco Animal Health is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insider Ownership
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. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 0.2% of Elanco Animal Health shares, worth about US$31m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Does This Data Suggest About Elanco Animal Health Insiders?
It doesn't really mean much that no insider has traded Elanco Animal Health shares in the last quarter. However, our analysis of transactions over the last year is heartening. Insiders do have a stake in Elanco Animal Health and their transactions don't cause us concern. 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. In terms of investment risks, we've identified 1 warning sign with Elanco Animal Health and understanding it should be part of your investment process.
But note: Elanco Animal Health may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
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.
This article by Simply Wall St is general in nature. 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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