Insiders who bought ModivCare Inc. (NASDAQ:MODV) shares over the past year have seen a glimmer of hope as the stock gained 22% in the last week. However, their purchase has proven to be a costly gamble, with insiders collectively experiencing losses totaling US$35k since the time of purchase.
While it is not advisable to base investment decisions solely on insider activity, monitoring insider transactions can provide valuable insights. The CEO and President of ModivCare, L. Sampson, made the largest insider purchase in the last 12 months, buying shares worth US$105k at a price of US$52.70 each. Despite the current stock price being lower at US$35.25, this purchase suggests that Sampson has a positive outlook on the company, believing it holds value even at higher levels.
Although Sampson was the only individual insider to buy shares in the past year, it is important to note that insider transactions are not limited to purchases. It is also crucial to consider insider ownership levels as an indicator of alignment between the company leaders and other shareholders. According to available data, insiders currently own approximately US$4.4m worth of ModivCare stock, representing around 0.9% of the company. Higher levels of insider ownership are generally favored.
While the recent insider transactions are encouraging, it would be more reassuring if insiders held a larger stake in the company. It is also essential to assess the risks associated with ModivCare. Investors should be aware of the two warning signs we have identified for the company.
In conclusion, while insider transactions can offer valuable insights, they should not be the sole basis for investment decisions. It is recommended to conduct comprehensive analysis and consider all factors before making any investment choices.
Sources: Simply Wall St