The worst performer on the S&P/ASX 200 index on Friday has been the Pro Medicus Limited (ASX: PME) share price.
In morning trade the health imaging IT provider's shares crashed as much as 10% lower to $34.09.
Though it is worth noting that even after this heavy decline, Pro Medicus' shares are still up 200% since the start of the year.
Why is the Pro Medicus share price crashing lower on Friday?
Investors have been hitting the sell button on Friday after the company revealed that two of its founders have sold a large number of shares.
According to the change of director's interest notices, executive director Anthony Hall and CEO Sam Hupert each offloaded 1 million shares through an underwritten block trade this morning.
Both executives received an average of $36.10 per share, which works out to be a total consideration of $36.1 million. This was a 5% discount to the last close price.
Despite these sales, both Mr Hall and Mr Hupert still have a significant interest of 28,067,500 ordinary shares each. This means that each of them holds~27% of the total issued share capital.
Why are the two founders selling shares?
These share sales shouldn't have come as a surprise to the market.
In February 2018 Pro Medicus announced that the board had encouraged the founders to consider selling up to 3 million shares each in order to improve the liquidity in the company's shares.
In keeping with the board's request, both executives sold 1 million shares in March 2018 and then a further 1 million shares this month.
Today's release reveals that a third and final million shares will be sold by the executives no earlier than the trading period which follows its half year results in February 2020.
What now?
Whilst insiders selling shares rarely goes down well with the market, given the advanced notice and their material holdings, I think today's sell off has been an overreaction and potentially created a buying opportunity for long-term focused investors.
Overall, I think investors should overlook this news and I continue to class Pro Medicus as a great buy and hold investment option along with fellow tech shares Nearmap Ltd (ASX: NEA) and Volpara Health Technologies Ltd (ASX: VHT).
