Insiders At DaVita Sold US$4.0m In Stock, Alluding To Potential Weakness

DaVita HealthCare Partners Inc. +0.81%

DaVita HealthCare Partners Inc.

DVA

141.38

+0.81%

The fact that multiple DaVita Inc. (NYSE:DVA) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, if numerous insiders are selling, shareholders should investigate more.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for DaVita

DaVita Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Chief Compliance Officer, James Hearty, sold US$3.0m worth of shares at a price of US$120 per share. That means that an insider was selling shares at slightly below the current price (US$137). 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. It is worth noting that this sale was 74% of James Hearty's holding.

Insiders in DaVita didn't buy any shares in the last year. 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!

insider-trading-volume
NYSE:DVA Insider Trading Volume March 28th 2024

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

DaVita Insiders Are Selling The Stock

The last three months saw significant insider selling at DaVita. Specifically, Chief Compliance Officer James Hearty ditched US$3.0m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

Does DaVita Boast High 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. DaVita insiders own about US$478m worth of shares (which is 4.0% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About DaVita Insiders?

An insider sold DaVita shares recently, but they didn't buy any. And there weren't any purchases to give us comfort, over the last year. But it is good to see that DaVita is growing earnings. 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. Every company has risks, and we've spotted 2 warning signs for DaVita you should know about.

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.

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 of direct interests only, but not derivative transactions or indirect interests.

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