Research shows that insider purchases tend to outperform broader market gauges by a wide margin, which is why insider trading indicators continue to receive strong attention from the investment community. Indeed, insider buying is relatively straightforward to interpret, considering there’s only one prime objective for purchasing shares. Conversely, insider selling is more complicated to interpret, especially due to the increased usage of equity-based compensation packages. It is impossible to know the exact reason each director or executive sells shares on the open market, which makes us believe that clusters of insider selling represent much more informative indicators that can be used in one’s stock analysis process. Insider Monkey processed the majority of Form 4 filings submitted with the SEC on Wednesday and identified five companies with either noteworthy insider purchases and sales.
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).
This Struggling Potash Producer’s CEO Buys Massive Block of Shares
Intrepid Potash Inc. (NYSE:IPI)’s Executive Chairman, President, and Chief Executive Officer, Robert P. Jornayvaz III, filed Wednesday to disclose the purchase of 338,761 shares of the company he leads, at prices that ranged from $1.14 to $1.40 per share. The freshly-acquired block of shares is held by Intrepid Production Corporation, of which Mr. Jornayvaz is the sole stockholder, sole director, and President. The CEO currently holds a direct ownership stake of 109,863 shares, as well as an indirect ownership stake of 11.69 million shares held by Intrepid Production Corporation.
The only U.S producer of muriate of potash has seen its market value plummet by a massive 89% over the past 12 months, as oversupply and foreign competition in the U.S potash market has put significant pressure on prices. Intrepid Potash Inc. (NYSE:IPI)’s average net realized potash sales price decreased to $216 per ton in the first quarter of this year, a significant dip from the $362 per ton which that figure stood at for the first quarter of 2015. Earlier this month, the company announced plans to idle operations at its West mine, a conventional mining facility in New Mexico that generated 42% of the company’s potash production in 2015. Royce & Associates, founded by Chuck Royce, cut its stake in Intrepid Potash Inc. (NYSE:IPI) by 13% during the March quarter, to 1.29 million shares.
Let’s move on to the next two pages of this daily insider trading article, where we will discuss noteworthy insider trading activity registered at four other companies.