The recent dustup between Pennsylvania Sen. Bob Casey and Centene CEO Michael Neidorff doesn’t seem to have shaken the faith of some inside Centene in the company’s prospects. Casey and Neidorff’s meeting earlier this month didn’t go well, and spilled into the public limelight, a rare occurrence for such tête-à-têtes.
Casey came out of it irked by Neidorff’s “callous” behavior concerning the care of a Texas toddler and wondered whether Neidorff’s attitude reflected the Medicaid managed care insurer’s modus operandi. In recent years, the company has grown into a $60-billion-a-year bemouth that covers over 8.5 million Medicaid beneficiaries.
The Australian-based financial advice company Simply Wall St notes that insiders have invested heavily in Centene. Trading by insiders—people who are associated with the company and own stock in it—is legal so long as the activities are disclosed and the trading isn’t done through information that only an insider can get.
Simply Wall St notes that “insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’”
Centene board member Jessica Blume was the insider who bought the most stock in the last year: $151,000 worth of shares, at about $52.99 per share, above the current share price of $46.54.
Simply Wall St notes that “the price an insider pays for shares is very important. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels.”
Overall, Centene insiders own 1.3% of the company, which Simply Wall St says is worth about $254 million. This level of insider ownership “increases the chances that management are thinking about the best interests of shareholders,” according to Simply Wall St.
