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Summary

  • Hanger formed a new 52-week low following insider selling activity.
  • CFO George E. Mchenry, Jr. unloaded 2,300 shares of the stock on the open market.
  • In my original article I discussed the company’s solid potential in the orthotic and prosthetic space, and no insider selling was anticipated.
  • However, with the company continuing to drive the prices of its products lower coupled with the insider selling activity, I’m no longer bullish on the stock.

Hanger (NYSE:HGR) recorded a new 52-week low on Monday following insider selling activity. CFO George E. Mchenry, Jr. unloaded 2,300 shares at an average price of $22.30 on the open market in a transaction that occurred on Thursday, August 14. The shares were sold for a total transaction of $51,290 that was disclosed in a document filed with the SEC.

Hanger is driving down the prices of its products sacrificing earnings in order to maximize its market share. The company operates in an extremely fragmented industry, which needs to be consolidated. Being the technologically most advanced player in the orthotic and prosthetic space, it was reasonable for Hanger to adopt the inorganic route of growth aggressively, aside from the organic route. However, the company didn't quite focus on aggressive acquisitions. All it did was acquire a few small patient care companies in 2012 and 2013.

In my original article, I painted a bullish outlook for Hanger, based on its growing market share and unmatched economies of scale. In a recent earnings update, I advised investors to wait on the sidelines until the company's cost-saving initiative starts to bear fruit. However, after the recent insider selling activity, I'm no longer bullish on the stock.

Source: Update: Insider Selling Drives Hanger To New 52-Week Low