WASHINGTON – When Senate Majority Leader Bill Frist asked a trustee to sell all his stock in his family’s hospital corporation, a large-scale sell-off by HCA Inc. insiders was under way.Shares of the Nashville, Tenn.-based hospital company were near a 52-week peak in June when Frist and HCA insiders were selling off their shares — just about a month before the price dropped.
Information about the insiders’ moves was publicly available through disclosures required by the Security and Exchange Commission
About 2.3 million shares, worth about $112 million, were sold by HCA insiders from January through June, with sales getting larger as the spring wore on, said Mark LoPresti of Thomson Financial. In May and June, 770,629 shares were sold for total gains of $42 million, he said.
The sales, which included moves by Hospital Corporation of America’s chief executive, treasurer, senior vice president for government programs and several directors, were among the largest insider selloffs analysts had seen, LoPresti said. Many officers made their largest trades ever in April, only to top them again in May and June, LoPresti said.
Meanwhile, HCA shares continued a steep climb that would ultimately take the price up 56 percent from October 2004 to July 2005, peaking in late June, LoPresti said.
But insider selling is sometimes seen a sign of looming trouble. Uninsured patient admissions were rising faster than those of insured patients, federal reimbursements were declining in real terms and payments did not keep up with cost increases. LoPresti himself discussed the insiders’ moves on an April 11 broadcast on the cable channel CNBC.