Why Medical Properties Trust Stock Got Socked Today

While large-scale insider sales don't necessarily mean a publicly traded company's management is abandoning ship, they generally don't inspire investor confidence. News of such a divestment hit Medical Properties Trust (NYSE: MPW) on Thursday, and the resulting sell-off saw the shares lose slightly more than 4% of their value.

A director sold a chunk of stock

A regulatory document filed after market close on Wednesday revealed that Medical Properties Trust director Michael Stewart sold 32,780 shares of its common stock. The price was $5.46 per share, and the sale left Stewart with 221,245 shares remaining in his portfolio.

That isn't a massive chunk of the company's more than 600 million shares currently outstanding, but for any individual it's a meaningful stake. That goes double for Stewart, as he's a director at the specialty real estate investment trust (REIT).

Medical Properties Trust has had quite a see-saw year. Its largest and most troubled tenant, Steward Health Care, declared Chapter 11 bankruptcy earlier this year. In September, the REIT and Steward reached agreement to transfer tenancy to 15 hospitals it had formerly operated.

Previous to that, Steward's difficulties badly affected its landlord's fundamentals, leading the REIT to aggressively cut its dividend twice in the space of less than two years.

Timing matters

Although the outlook for Medical Properties Trust is now brighter after the Steward deal, investors still have painful memories of the recent struggles stemming from the relationship of the two companies. In other words, investors are still in need of morale-boosting news, and a 32,000-plus share sale doesn't seem to be fitting the bill.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.