Three Companies with Clusters of Insider Selling That Are Hard To Ignore

Lear Corporation (NYSE:LEA) had ten different executives unload shares last week, which could make even the most resilient investor worry about the company’s future stock performance. So let’s take a quick look at several noteworthy insider sales reported by Lear’s insiders. To start with, Senior Vice President and Chief Financial Officer Jeffrey H. Vanneste offloaded 12,401 shares last Thursday and 19,917 shares during the following day at a weighted average price of $103.86 and cut his stake to 12,869 shares. Melvin L. Stephens, Senior Vice President of Communications, Corporate and Investors Relations, discarded 17,146 shares last week at a weighted average price of $103.86, trimming his overall holding to 40,000 shares. More importantly, President and Chief Executive Officer Matthew J. Simoncini offloaded 123,162 shares last week at an average price of $103.86 and currently owns 42,341 shares. An additional 43,776 shares were sold by Executive Vice President and President of Seating, Raymond E. Scott, who continues to own 16,152 shares.

The Tier one supplier to the automotive industry has seen its shares decline 17% year-to-date, presumably because of worries that the auto industry might have peaked already. Lear Corporation generated net sales of $18.21 billion in 2015, up from $17.73 billion in 2014 and $16.23 billion in 2013. At the current share price level, the supplier of automotive seating systems and electrical power management systems appears to have a very cheap valuation. For instance, the stock trades at a forward P/E ratio of 7.62, which is below the average forward P/E of 9.8 for the Auto Parts and Equipment industry and substantially below the average of 15.75 for the S&P 500. The number of hedge funds monitored by our team with stakes in the company declined to 35 from 38 during the December quarter. Cliff Asness’ AQR Capital Management lifted its stake in Lear Corporation (NYSE:LEA) by 29% during the fourth quarter to 1.37 million shares.

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