Why Are Influential Insiders Selling Shares of These Companies?

Moving on to McKesson Corporation (NYSE:MCK), where Lori A. Schechter, Executive Vice President, General Counsel, and Chief Compliance Officer, reported selling 2,476 shares on Monday at a price of $159.73 per share. After the recent sale, the executive continues to own 5,548 units of common stock. Even though this sale is not excessively significant, the timing of the sale might serve as reason for concern for some investors. The stock of the healthcare services and information technology company is down by 26% over the past 52 weeks, after having dropped 21% in 2016 alone. It is highly unlikely that the insider sold shares without fearing even more downside, but it is still impossible to stipulate the reasoning behind the sale.

McKesson reported revenues of $144.21 billion for the nine months ended December 31, as compared to $134.12 billion reported for the same period of the previous year. Similarly, the company’s net income increased to $1.87 billion from $1.40 billion reported for the nine-month period that ended December 31, 2014. However, McKesson’s valuation metrics suggest that the company is relatively undervalued as compared to the broader market. For instance, the stock trades at a forward P/E multiple of 11.35, which compares with the forward P/E ratio of 16.3 for the drug retail industry. The smart money sentiment towards the stock was very positive in the third quarter, as the number of hedge funds with positions in the company climbed to 68 from 62 quarter-on-quarter. Andreas Halvorsen’s Viking Global was very bullish on McKesson Corporation (NYSE:MCK) during the third quarter of 2015, and owned 2.27 million shares of the company at the end of September.

Disclosure: None