Adobe Systems Incorporated (ADBE) Registers Notable Cluster of Insider Selling, Plus Two Other Companies with Insider Selling

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.

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Let’s head to the next page of this article, where we will discuss noteworthy insider selling activity registered at two other companies.

Maker of Veterinary Products Sees CEO Offload Shares

Heska Corp (NASDAQ:HSKA) saw its most informed and supposedly most influential executive unload a sizable block of shares this past week. President and CEO Kevin S. Wilson sold 14,040 shares on Friday at prices that fell between $37.95 and $40.01 per share, cutting his direct ownership stake to 165,969 shares. Mr. Wilson also holds several hundreds of thousands of shares indirectly. In fact, the CEO has an aggregate ownership of 542,723 shares that accounts for 7.9% of the company’s outstanding shares, held by a limited liability company owned by Mr. Wilson and his spouse, as well as trusts for the benefit of his children and family.

The maker of advanced veterinary diagnostic and other specialty veterinary products has seen its shares gain 2% thus far in 2016, thanks to a surge of 31% in the past three months. Heska Corp (NASDAQ:HSKA)’s revenue for the first three months of 2016 was $27.15 million, up from $22.89 million reported a year ago. The increase in the company’s top line was mainly driven by higher revenue from its imaging products, instrument consumables and hematology instruments.

Heska shares are currently changing hands at around 31.2-times expected earnings, significantly above the forward PE ratio of 16.6 for the S&P 500 Index. There were 10 money managers from our system with long positions in the company at the end of the March quarter, who hoarded up 11% of its total number of outstanding shares. Peter S. Park’s Park West Asset Management owned nearly 282,000 shares of Heska Corp (NASDAQ:HSKA) on March 31.

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Processed Meat Manufacturer Has Board Member Sell Shares amid Stock Underperformance

One member of Hormel Foods Corp (NYSE:HRL)’s board sold some shares this past week. Board member Dakota A. Pippins discarded 5,000 units of common stock on Friday at $36.74 apiece, cutting his ownership to 96,416 units.

The processed meat manufacturer has seen the value of its shares drop by 8% since the beginning of 2016. Hormel Foods Corp (NYSE:HRL) posted net sales of $2.30 billion for the three months that ended April 24, up from $2.28 billion reported for the same period of the previous year. The increase was mainly driven by the acquisition of the much smaller organic processed meats company called Applegate Farms LLC. The New Jersey-based company was acquired in mid-July of 2015 for $774.1 million in cash. Meanwhile, Hormel Foods reported record net earnings per diluted shares of $0.40 for the second quarter of fiscal 2016, up from $0.33 per diluted shares reported a year ago.

The number of hedge fund vehicles from our system with equity investments in Hormel Foods rose to 21 from 15 during the March quarter, while the overall value of those investments jumped to $254.67 million from $168.86 million quarter-on-quarter. Israel Englander’s Millennium Management acquired a new stake of nearly 412,000 shares of Hormel Foods Corp (NYSE:HRL) during the March quarter.

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