The U.S. Securities and Exchange Commission restricts insiders from buying or selling securities based upon access to material confidential or proprietary information that is not available to the public. But that does not necessarily mean insiders cannot trade their company’s shares. Of course, Board members and executives will not buy shares ahead of merger announcements or other information-heavy events as they used to decades ago, but they do follow a pattern of “buying low and selling high”.
Any investor would love to buy low and sell high on a consistent basis, but it is nearly impossible to time the market accurately on all occasions. While insider buying usually conveys positive information, insider selling is not overly bearish as investors may think. Corporate insiders tend to sell shares for a wide range of reasons, some of which may have nothing to do with their company’s current developments or future prospects, so investors should carefully interpret this type of activity. As already mentioned, insiders do have a tendency to sell high, which means they tend to sell shares heavily when the market value of their company is approaching or exceeding the “correct” or “fair” value. That said, the following article will lay out a list of three companies that registered noteworthy insider selling this past week.
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Strong Performing Adobe Systems Registers Cluster of Insider Selling
Adobe Systems Incorporated (NASDAQ:ADBE) registered a cluster of insider selling last week, which included four different insiders. To start with, Bradley Rencher, Executive Vice President and General Manager of Digital Marketing, discarded 37,562 shares on Friday at prices varying from $95.43 to $95.59 per share, trimming his overall holding to 47,269 shares. Richard T. Rowley, Chief Accounting Officer, Vice President and Controller, offloaded a mere 271 shares on the same day for $95.68 each, cutting his stake to 1,348 shares. Moreover, Bryan Lamkin, Executive Vice President and General Manager of Digital Media, sold 9,616 shares on Friday at a price tag of $95.04 each, which trimmed his ownership to 23,665 shares. Last but certainly not least, John E. Warnock, a co-founder and co-chairman of Adobe Systems, unloaded 4,000 shares on Thursday at prices ranging from $95.00 to $95.31 per share. All these shares were held by The Warnock Family Trust that continues to own 581,115 shares. Mr. Warnock also holds a direct ownership stake of 16,088 shares.
The shares of Adobe Systems Incorporated (NASDAQ:ADBE) have surged 202% over the past five years, as the company has successfully transitioned to a subscription-only model for its portfolio of products. In 2013, the software giant started moving its Adobe Creative Suite, which includes a series of software products such as Photoshop, Illustrator and Dreamweaver, to the cloud. And this move has paid off handsomely for both shareholders and the company itself. Just recently, the company reported record quarterly revenue of $1.40 billion for its second quarter of fiscal 2016 that ended June 3, marking a growth of 20% year-over-year.
The number of asset managers followed by Insider Monkey with stakes in the software company spiked to 63 from 46 during the first quarter of 2016, with those 63 money managers amassing nearly 7% of the company’s outstanding shares. Stephen Mandel’s Lone Pine Capital was the equity holder of 5.07 million shares of Adobe Systems Incorporated (NASDAQ:ADBE) at the end of March.
Let’s head to the next page of this article, where we will discuss noteworthy insider selling activity registered at two other companies.