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Largest U.S. Beauty Retailer and Single-Family REIT Register Massive Insider Selling, Plus Other Insider Transactions

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In a fresh study on insider trading, several researchers from a top-tier U.S. university split insider trading into two camps: predictable or “routine” insider trading; and information-rich or “opportunistic” insider trading that contains strong predictive power for the future of firms. The so-called routine insider selling is usually triggered by diversification or liquidity reasons, because corporate insiders’ holdings of company stock tend to comprise a high portion of their wealth. For instance, insider trading watchers might have noticed that Bill Gates trades in a pre-announced and routine fashion, but that does not necessarily mean Mr. Gates foresees bad times ahead for Microsoft Corporation (NASDAQ:MSFT).

The aforementioned study on insider trading concluded that the abnormal returns associated with routine trades were essentially zero, whereas information-rich insider transactions yielded value-weighted abnormal returns of 82 basis points per month. Corporate insiders have a better understanding of their company’s business and industry environment than most of us, which is one possible explanation for their success at trading securities. The law requires that information be “material” to constitute illegal insider trading, so insiders can keep buying and selling securities legally despite having a clear edge over outsiders. Without further ado, let’s have a look at a set of notable insider transactions reported with the SEC on Thursday.

Through extensive research that covered the portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see the details here).

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Executive Chairman of Diversified Consumer Products Company Purchases Shares

A well-informed corporate insider at Spectrum Brands Holdings Inc. (NYSE:SPB) increased his stock holding in the company this week. David. M. Maura, Executive Chairman of the company’s Board of Directors, purchased 2,000 shares on Thursday at prices ranging from $127.10 to $127.87 per share. Following the recent transaction, Mr. Maura currently owns 279,633 shares.

The diversified global branded consumer products company sells products in seven major product categories: consumer batteries, small appliances, personal care, hardware and home improvement, pet supplies, home and garden, and auto care. Spectrum Brands Holdings Inc. (NYSE:SPB) has seen the value of its shares increase by 27% since the beginning of the year. The company reported net sales of $407.7 million for the nine months that ended July 3, up 12.1% year-over-year. Organic net sales grew by 4.9% year-on-year. There were 23 hedge funds tracked by Insider Monkey with long positions in the diversified consumer products company at the end of June, down from 25 recorded at the end of March. Ken Griffin’s Citadel Advisors LLC had around 618,000 shares of Spectrum Brands Holdings Inc. (NYSE:SPB) among its holdings at the end of the second quarter.

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The next two pages of this insider trading article will discuss a few other notable insider transactions reported with the U.S. SEC on Thursday.

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