Last week’s dollar value of insider purchases decreased significantly from the massive volume of insider buying recorded during the week prior to that, which was primarily driven by voluminous insider purchases at United Continental Holdings Inc. (NYSE:UAL). Meanwhile, last week’s dollar volume of insider selling quadrupled week-over-week. The insider trading behavior observed last week may not be great news for insider trading watchers, so it remains to be seen how insider trading indicators will evolve over the next couple of weeks. Unlike many of our previous insider trading articles that focused on insider buying and selling separately, this article will focus on five companies with either form of noteworthy insider trading. Precisely, the article will discuss three companies with insider buying activity, as well as two companies with notable insider selling activity.
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).
Bank of the Ozarks Had Two Board Members Buy Shares This Past Week
According to a fresh Form 4 filing, Bank Of The Ozarks Inc. (NASDAQ:OZRK)’s Board member Nicholas A. Brown bought 2,900 shares on Thursday at a weighted average cost of $36.86, lifting his overall holding to 8,089 shares. Director Ross M. Whipple snapped up 120,000 shares on the same day at prices varying from $37.55 to $37.93 per share, of which 100,000 shares are held indirectly through LLLP. After the recent purchase, Mr. Whipple currently owns a direct ownership stake of 74,975 shares, as well as an indirect ownership position of 700,000 shares via LLLP.
The recent insider buying comes shortly after Carlson Block, Chief Investment Officer of investment research firm Muddy Waters, presented a bearish investment thesis on the Arkansas-based bank holding company at the 2016 Ira Sohn conference last week. Mr. Block claimed that Bank Of The Ozarks Inc. (NASDAQ:OZRK) has provided too many construction loans in real estate markets that seem to have peaked already, including New York and San Francisco. “When there are downturns in real estate lending markets, their balance sheet really could come under severe pressure”, said Muddy Waters’ CIO. Shares of the bank are down by 24% year-to-date. BlueCrest Capital Mgmt, founded by Michael Platt and William Reeves, acquired a new stake of 30,684 shares of Bank Of The Ozarks Inc. (NASDAQ:OZRK) during the March quarter.
On the next two pages of this article we’ll discuss noteworthy insider purchases and sales witnessed at four other companies.