12-month performance: -25% Insider activity: Bullish Insider buying pattern: Large purchases from several insiders Recent news: Solid Q2 results
Top-level corporate insiders have deeper insight into their company’s operations than any outside analyst could ever hope to obtain. Quite simply, they are the smart money. This means that their buying and selling activity can provide valuable clues in relation to a stock’s potential.
In this article, we are going to highlight recent insider buying at eHealth Inc (EHTH:US). EHealth is a US-based health insurance company that provides a private online source of health insurance for individuals, families, and small businesses. The company is listed on the NASDAQ Global Select Market and currently has a market capitalisation of $1.9 billion.
What stands out to us here is that this month, CEO Scott Flanders has purchased a large number of eHealth shares. According to Form 4 filings, the insider has made three purchases: ● 3 August: 15,000 shares at $67.51 per share ● 4 August: 2,248 shares at $67.99 per share ● 5 August: 32,752 shares at $73.63 per share In total, the CEO has spent over $3.5 million on eHealth shares this month. On top of this, two other insiders have purchased eHealth shares recently. On 31 July, Independent Director Dale Wolf purchased 2,000 shares at a price of $71.06 per share. And then on 7 August, Chief Digital Officer Philip Morelock purchased 950 shares at a price of $78.29 per share.
Source: 2iQ Research
First CEO purchase since 2016
This insider buying activity looks interesting for a number of reasons. Firstly, the purchases from CEO Scott Flanders – his first since mid-2016 – are significant. They are the largest insider purchases for a number of years. These purchases have increased his holding by about 8%. Secondly, Flanders has served as a director at eHealth since 2008. He is likely to know the company well. Third, three insiders have purchased within a short period of time. This pattern of ‘cluster buying’ is generally quite bullish.
Share price fall
In its recent Q2 results, issued on 23 July, eHealth reported a 35% increase in revenue. It also increased its 2020 annual revenue and adjusted EBITDA guidance for the second time this year. Yet the market didn’t like the results, with the stock falling more than 20%. Clearly, the insiders who have bought recently believe the stock is oversold. All things considered, we see the recent insider buying activity at eHealth as a bullish signal.
Disclaimer: Neither 2iQ Research GmbH nor its content providers are responsible for any damages or losses arising from any use of this information.
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