Yahoo Finance Did An Insider Sell Their Shares In Anthem Inc (NYSE:ANTM)?
Anthem, Inc., through its subsidiaries, operates as a health benefits company in the United States. Anthem’s insiders have divested from 248.00 shares in the large-cap stock within the past three months. Generally, insiders selling shares in their own firm sends a bearish signal. A two-decade research published in The MIT Press (1998) showed that stocks following insider selling declined 2.7% relative to the market. But these signals may not be sufficient to gain confidence on whether to divest. I’ve assessed two potential reasons behind the insiders’ latest motivation to sell their shares.
Check out our latest analysis for Anthem
Which Insiders Are Selling?
There were more Anthem insiders that have sold shares than those that have bought. In total, individual insiders own less than one million shares in the business, or around 0.11% of total shares outstanding. The insider that recently sold more shares is Julie Hill (board member) .
Is Future Growth Outlook As Bearish?
At first glance, analysts’ earnings expectations of 40.6% over the next three years illustrates an optimistic outlook going forward. But this is not consistent with the signal company insiders are sending with their net selling activity. Digging deeper into the line items, analysts anticipate a limited level of revenue growth next year, which is expected to negatively impact the bottom line, with a growth rate of -8.8%. This illustrates that cost growth has exceeded top-line, leading to an unsustainable decline in earnings. Selling activities by insiders seem to be consistent with this pessimistic future prospect. Or they may simply deem the current share price is well-above its intrinsic value, providing an opportune time to sell.
Can Share Price Volatility Explain The Sell?
Another factor we should consider is whether the timing of these insider transactions coincide with any significant share price movements. This means, if insiders believe shares were heavily undervalued recently, this would provide a prime opportunity to buy more irrespective of its growth outlook. Within the past three months, Anthem’s share price traded at a high of $267.13 and a low of $221.42. This indicates some volatility with a share price change of of 20.64%. Insiders’ purchases may not be driven by this movement but perhaps they may simply want to diversify their holdings, distribute stock to investors, or simply require the cash for personal reasons.
Next Steps:
Anthem’s insiders’ meaningful divestments tells us that their shares have recently fallen out of favour, reinforced by the negative earnings growth expectations, though share price volatility was perhaps inconsequential to cash in on any mispricing. But we must also be aware that insiders divesting may not actually be based their views on the company’s outlook. Moreover, while insider selling can be a useful prompt, following the lead of an insider, however, will never replace diligent research. I’ve put together two key factors you should further examine:
Financial Health: Does Anthem have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Other High Quality Alternatives : Are there other high quality stocks you could be holding instead of Anthem? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
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.
