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Significant Insider Selling at Three Companies; Insider Buying at Cenveo Inc. (CVO) and UMH Properties Inc. (UMH)

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According to insider trading data provided by CNBC, the overall volume of insider selling recorded in August reached the highest figure in the past 12 months. Insiders sold shares worth around $4.49 billion during the last month. This figure should not seem overly surprising for the investment community given that U.S. stock market benchmarks were hitting new all-time highs.

As a general rule, sales transactions are considered to be less informative than purchase transactions because insiders usually have various reasons to sell shares of their companies that may not have anything to do with future prospects. Most often, corporate insiders sell shares simply to adjust their portfolios or increase liquidity. The investment community is well aware that illegal insider trading involves using material non-public information as a basis for trade. And although illegal insider trading could play a positive role by enhancing stock market efficiency and helping firms compensate managers for their successful managerial decisions and efforts, most market participants have very negative views on the illegal kind of insider trading activity. Without going deeper into details, let’s have a look at a set of noteworthy 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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Another Insider at Struggling Manufacturer of Print-Related Products Purchases Shares

Soon after Cenveo Inc. (NYSE:CVO)’s President and CEO purchased 13,800 shares last week, another corporate insider at the company bought some shares earlier this week. Board member Mark J. Griffin snapped up 1,000 shares on Wednesday at a price tag of $6.53 each, lifting his overall holding to 38,957 shares.

The diversified manufacturing company focused on printed-related products has lost 51% of its market capitalization in the past 12 months, which somewhat explains the recent spike in insider buying at the company. Print-related industries continue to remain highly competitive due to overcapacity and pricing pressures, which could put more weight Cenveo Inc. (NYSE:CVO)’s financial results in the foreseeable future. The company’s net sales for the second quarter decreased by $9.3 million year-over-year to $404 million. There were a mere six hedge funds from our system invested in Cenveo at the end of June, amassing 8% of the company’s total number of outstanding shares. Howard Guberman’s Gruss Asset Management was the owner of 1.10 million shares of Cenveo Inc. (NYSE:CVO) at the end of the second quarter.

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The next two pages of this article will discuss noteworthy insider trading activity recorded at four other companies.

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