Insider Buying

Insider Buying Report: Centene Corp (CNC:US)

Centene Corp
(CNC:US)
12 months:
+18.90%
Activity:
Bullish
Pattern:
Purchases from multiple directors
News:
Q1 results
Centene Corp
(CNC:US)
12 months:
+18.90%
Activity:
Bullish
Pattern:
Purchases from multiple directors
News:
Q1 results

If multiple insiders are buying company stock simultaneously, it’s often worth taking a closer look. This buying pattern – which is known as ‘cluster buying’ – is a particularly strong insider trading signal.

Here, we are going to highlight cluster buying by directors at Centene Corp (CNC:US). Centene Corp is an American company that provides healthcare plans to its members. It offers over 500 product solutions and services and acts as an intermediary for government-sponsored plans such as Medicaid and Medicare as well as for privately insured healthcare programs. The company also sells its proprietary software to third parties. It is listed on the New York Stock Exchange and currently has a market capitalization of $49.18 billion.

Centene Corp: Insider Buying

Our insider transaction data shows that between April 28 and April 29, three insiders at Centene Corp bought stock. Those who bought shares were:

  • Director Christopher Coughlin (12,000 shares @ $81.37 per share)
  • Director Theodore Samuels (6,270 shares @ $80.94 per share)
  • Director James Dallas (3,065 shares @ $81.75 per share)

In total, the three insiders spent a little over $1.7 million on Centene Corp stock.

Large Increase in Holdings

This insider buying at Centene Corp is notable for a few reasons.

Firstly, two of the three insiders have increased their holdings by a significant percentage. Mr. Coughlin has boosted his position by over 300% while Mr. Samuels has increased his position by about 140%. This suggests that they are very confident that the shares are undervalued. These insider purchases are the first at the company for over a year and in spending over $1.7 million on stock, it suggests that the directors are convinced the shares will move higher in the future.

Secondly, all of the directors have either a financial background or a background within the healthcare sector. Mr. Dallas was a Senior Vice President at medical device maker Medtronic and was Chief Investment Officer at Pacific Corp. Mr. Samuels has 35 years of experience in the financial industry and was a successful global equity portfolio manager at investment giant Capital Group. Mr. Coughlane was instrumental in aiding in the turnaround at Tyco where he took on the role of CFO and he has been a director of large healthcare companies such as Allergan, Alexion and Covidien. This means the directors are equipped to understand the business well and are in a position to make a good assessment of its prospects.

Positive Momentum

Centene Group posted an impressive set of Q1 2022 figures on the back of strong growth in demand for its products and services.

Managed care membership of 26.2 million at the end of March was an 8% increase on the membership levels at the end of March 2021. The revenue figure of $37.2 billion for Q1 2022 was 24% higher than a year prior. Adjusted diluted EPS of $1.83 for the first quarter was up on the $1.63 achieved in Q1 2021.

Due to additional premium revenue and additional tax premium revenue the company was able to up its guidance for the full year, and now forecasts adjusted EPS of $5.40 to $5.55.

"While it is still early in the year, we are pleased to start strong across all of our business lines. Our updated full year 2022 outlook reflects the Company's positive momentum as well as our refreshed expectations around the timing of Medicaid redeterminations," said CFO Drew Asher.

Given these strong Q1 results and positive outlook for the business, we see the recent insider buying at Centene Group as bullish. The insiders are indicating they are very confident that the shares will move higher and that they represent good value at these levels.

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