The Standard and Poor’s 500 Index slid into negative territory for the year on Thursday, after falling 1.5% in the first trading session after the Fed’s decision to raise interest rate. The decline in energy equities dragged down all major U.S. stock indexes on Thursday, all of which posted losses of more than 1%. In the meantime, some companies’ insiders have been cashing out their holdings ahead of the upcoming two holiday-shortened trading weeks. As a general rule, insider selling is primarily perceived as a bearish signal, but the increased usage of stock options as employee compensation has made this type of activity quite hard to interpret. Corporate insiders can sell shares for a wide variety of reasons that might not necessarily be related to their companies’ future prospects, but heavy insider selling can still raise red flags that investors should not overlook. The Insider Monkey team identified noteworthy insider sales at three companies, and this article focuses on investigating those sales and the performance of the companies in question.
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Cisco Systems Inc. (NASDAQ:CSCO) has witnessed heavy insider selling activity in recent months, and had another executive sell big this week. Executive Vice President and Chief Development Officer Pankaj Patel reported selling 50,000 shares on Tuesday and 30,000 shares on Wednesday at prices that ranged from $26.67-to-$27.13 per share, all of which were held by a trust fund called Trust #1. After the recent sell-off, this trust fund holds 87,774 shares. The CDO also holds a direct ownership stake of 574,019 shares, along with an additional 128,005 shares and 28,368 shares owned by Trust #2 and Trust #3, respectively. Shares of Cisco are nearly 4% in the red year-to-date and trade at a trailing price-to-earnings ratio of 14.29, which is significantly below the average of 22.73 for the companies included in the S&P 500 benchmark. Even though the company generated revenue growth in the enterprise market for the first quarter of fiscal 2016, this market experienced depressed business momentum as a result of high macroeconomic uncertainty outside the United States. Cisco Systems Inc. (NASDAQ:CSCO) reported revenue of $12.68 billion for the first quarter of fiscal 2016, up 3.6% year-on-year. The price and product competition in the communications and networking industries has been intensifying in recent years, which might have put some pressure on Cisco’s financials. Donald Yacktman of Yacktman Asset Management cut his fund’s position in Cisco Systems Inc. (NASDAQ:CSCO) by 15% during the third quarter to 36.11 million shares.