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Have These 3 Companies That Registered Heavy Insider Selling Recently Hit Their “Fair” Market Value?

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Although it would be unwise to claim that insider selling should always be interpreted as a bearish or pessimistic sign, this type of insider trading activity can provide some insights about how corporate insiders feel about their companies’ prospects. Retail investors employ various trading strategies and follow different investment philosophies, so there is a wide range of aspects investors consider when deciding on whether to buy, keep or sell certain companies’ shares. Examining insider trading behavior is one such primary aspect that investors need to keep tabs on, considering that insider sentiment usually serves as a reliable and accurate indicator of future stock performance.

Heavy insider selling at certain companies may suggest that insiders believe those companies have reached a fair valuation or may suggest that insiders simply anticipate softening market conditions. Nonetheless, each investor should keep in mind that insiders can sell shares for various reasons unrelated to their companies’ prospects and current performance, some of which include personal cash needs or tax payments, among others. Still, if I were investing my hard-earned money into a company’s stock, I would definitely be troubled by heavy insider selling occurring at that company. So abundant insider selling should prompt investors to carefully consider the future potential of their investment. That said, the following article will discuss fresh insider selling at three companies, as reported with the SEC on Tuesday.

Academic research has shown that certain insider purchases historically outperformed the market by an average of seven percentage points per year. This effect is more pronounced in small-cap stocks. Another exception is the small-cap stock picks of hedge funds. Our research has shown that imitating the 15 most popular small-cap stocks among hedge funds outperformed the market by nearly a percentage point per month between 1999 and 2012 (read more details here).

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Two Insiders of Direct-to-Consumer Seller of Kitchen and Personal Products Sell Massive Blocks of Shares

Tupperware Brands Corporation (NYSE:TUP) has witnessed worrisome insider selling over the past several trading sessions. To begin with, Board member Angel R. Martinez discarded 10,000 shares on Monday at prices ranging from $62.20 to $62.31 per share, cutting his overall holding to 28,439 shares. More importantly, Chairman and CEO E. V. Goings offloaded 150,000 shares on Friday at prices varying from $62.23 to $62.86 per share. After the recent sale, Mr. Goings holds 54,456 shares.

The direct-to-consumer seller of kitchen and personal products has seen its shares advance by 12% so far in 2016. The massive insider selling comes shortly after Tupperware Brands Corporation (NYSE:TUP) released its financial results for its second quarter of fiscal year 2016 ended June 25. The company’s fiscal second quarter net sales were $564.7 million, down by 4% in U.S. dollar terms and up by 3% in local currency terms. Sales generated in emerging markets, which accounted for 66% of the company’s top-line, were down by 4% year-over-year in USD but up by an impressive 7% in local currency. Net sales in Indonesia, the company’s largest business unit in 2015, grew by 3% year-on-year in USD after plummeting by a disturbing 13% in the first quarter. Tupperware’s GAAP net income fell to $52.4 million from $62.0 million recorded a year earlier.

The number of asset managers followed by Insider Monkey with equity investments in Tupperware Brands increased to 21 from 18 during the first quarter of 2016, with those 21 managers holding nearly 7% of the company’s outstanding common stock at the end of March. Ray Carroll’s Breton Hill Capital upped its stake in Tupperware Brands Corporation (NYSE:TUP) by 55% during the second quarter to 15,304 shares.

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The second page of this article will reveal the fresh insider selling registered at two other companies.

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