This year the Pro Medicus Limited (ASX: PME) share price has consistently been one of the best performers on the Australian share market.
Unfortunately, that run has come to an end in September with its shares actually the worst performers on the S&P/ASX 200 index with a decline of 24%.
Why is the Pro Medicus share price down 24% this month?
Investors have been selling the health imaging IT provider's shares this month after it announced that two of its founders have sold a large number of shares.
According to the release, the company's executive director Anthony Hall and its CEO Sam Hupert offloaded 1 million shares each via an underwritten block trade on September 6.
Both executives received an average of $36.10 per share, which equates to a total consideration of $36.1 million. This was a 5% discount to the share price at the time of the sales.
Whilst insider selling rarely goes down well with the market, it is worth noting that this was a pre-planned sale and came at the request of the Pro Medicus board.
In February 2018, the company announced that the board had encouraged the founders to consider selling up to 3 million shares each in order to improve liquidity.
The first million shares were sold soon after in March 2018, then this month's sales were the second million. The company revealed that the final million shares that each executive has committed to sell will be sold no earlier than the trading period which follows its half year results in February 2020.
And even after these sales these two executives will still have a significant interest. Following the sales this month, both Mr Hall and Mr Hupert reported an interest of 28,067,500 ordinary shares each. This means that each of them holds ~27% of the total issued share capital.
Should you buy the dip?
I think the selloff of Pro Medicus' shares has been an overreaction and has created a buying opportunity for investors that want to make a long term investment in a high quality and growing company.
Overall, I would class it as a buy along with fellow healthcare shares CSL Limited (ASX: CSL) and ResMed Inc (ASX: RMD).
