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Insider Buying at Baker Hughes, Pure-Play SNF REIT, and Car Rental Giant Hertz Global, Plus Insider Selling at 2 Companies

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Investors use various trading strategies and follow different investment philosophies, so they tend to look at a wide range of aspects when deciding whether to buy, keep or sell a certain company’s shares. Insider trading behavior is one aspect investors can analyze as part of their stock analysis process, as insider sentiment usually serves as an accurate indicator of future stock performance.

Corporate insiders have a preponderance to follow the pattern of buying low and selling high, and this contrarian approach to investing, coupled with access to superior information, has allowed insiders to beat stock market gauges over the years. Heavy insider selling at certain companies might suggest that insiders believe those companies have reached a fair valuation, or might convey expectations of softening market conditions. Nonetheless, investors should keep in mind that insiders tend to sell shares for various reasons, including personal cash needs, tax payments, and others. That being said, let’s proceed to our brief discussion of several noteworthy insider transactions reported with the SEC on Wednesday.

At Insider Monkey, we track around 750 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details).

Hertz HTZ

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Board Member at Well-Known Oilfield Services Provider Buys Shares After Merger Announcement

One member of Baker Hughes Incorporated (NYSE:BHI)’s boardroom filed Wednesday to disclose the purchase of a sizeable block of shares. Gregory Dean Brenneman, who has been serving on the company’s Board of Directors since early June 2014, bought 85,000 shares on Monday at prices varying from $58.66 to $59.12 per share. After the recent purchase, Mr. Brenneman currently owns a total of 89,425 shares.

The insider purchase comes shortly after General Electric Company (NYSE:GE) announced in late October that it would merge its oil and gas business with Baker Hughes Incorporated (NYSE:BHI), creating the world’s second-largest oilfield services provider. The freshly-announced deal represents a clear sign that consolidation in the energy sector is picking up, as companies are likely to endure long-term lower oil prices. In addition to being able to achieve significant cost synergies, analysts argue that the “new Baker Hughes” will be able to reach revenue synergies as well. According to analysts at Guggenheim Securities, “if GE is able to go beyond the cost savings and related benefits of scale, and leverage its technology with Baker Hughes – particularly in the areas of materials, diagnostics, and analytics – labor productivity and capital-efficiency metrics would not only improve, but new services and business models could be created.” The shares of Baker Hughes have gained 32% since the beginning of the year. Ken Griffin’s Citadel Advisors LLC reported owning 3.86 million shares of Baker Hughes Incorporated (NYSE:BHI) through the round of 13Fs for the third quarter.

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Let’s head to the next two pages of this article, where we will discuss more insider transactions reported with the SEC on Wednesday.

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