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Enormous Cluster of Insider Selling at Brokerage and Investment Banking Firm Stifel (SF), Plus Other Noteworthy Insider Transactions

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Some insider trading pundits have concluded that the best signal of future stock price appreciation is significant insider buying by one or both of the top two executives – the Chief Executive Officer and Chief Financial Officer. The approach of tracking insider buying completed by the CEO and/or CFO could have delivered strong returns over the years regardless of market conditions, and this does make perfect sense.

Corporate insiders, especially those two top-tier executives, do have a better understanding about their companies’ business operations and future prospects than any of us, so their transactions may serve as great tips for outsiders. It appears that the major reason insiders purchase shares in their own companies on the open market is that they believe those shares are severely undervalued. On the other hand, insiders can sell for any number of reasons, which is why investors pay much more attention to insider buying than insider selling. With that in mind, let’s discuss a set of noteworthy insider transactions reported with the SEC on Wednesday.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively the most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.

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Board Member of Office Building Landlord Buys Shares

One member of Paramount Group Inc. (NYSE:PGRE)’s Board of Directors purchased a sizable block of shares earlier this week. Board member Katharina Otto-Bernstein, a German-born filmmaker, producer and screenwriter, snapped up 100,000 shares on Tuesday at prices varying from $15.66 to $15.78 per share. Following the recent transaction, Ms. Otto-Bernstein currently owns an aggregate of 11.93 million shares.

The real estate investment trust (REIT) focused on owning and managing high-quality, Class A office properties in select central business district submarkets of New York City, Washington, D.C., and San Francisco, has seen the value of its shares drop by 13% since the start of the year. It would be safe to argue that the shares of most REITs have been predominantly driven by the monetary policy pursued by the Federal Reserve. With the Fed expected to raise rates in December after remaining “on hold” for nearly a year, the tightening monetary policy will theoretically put some downward pressure on most REITs, and Paramount Group Inc. (NYSE:PGRE) should be no exception. In mid-September, Paramount Group agreed to acquire One Front Street, a 651,000-square-foot Class A office building in San Francisco, California for $521 million. Jim Simons’ Renaissance Technologies was the owner of 1.32 million shares of Paramount Group Inc. (NYSE:PGRE) at the end of the third quarter.

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On the next two pages of this article we’ll discuss the fresh insider buying and selling observed at four other companies.

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