The Standard and Poor’s 500 Index inched up by 1.6% over the last week. The index closed above its 50-day moving average for the first time in 2016 on Thursday, which was seen as a bullish signal among technically-oriented investors. Meanwhile, last week’s volume of insider buying decreased by approximately 71%, whereas the volume of insider selling increased by more than 10% sequentially. As a result, last week’s ratio of insider selling to insider buying surged relative to the week before, which is not extremely surprising given the high uncertainty and volatility in equity markets, and the recent rally in U.S. equities. Even though the insider buying activity dropped significantly last week, there were a few companies that witnessed sizable insider purchases. The Insider Monkey team analyzed dozens of Form 4 filings submitted with the SEC on Friday and identified three companies with notable acquisitions.
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).
CARBO Ceramics Inc. (NYSE:CRR) has seen one of its most influential insiders gradually pile more shares over the past several weeks. Chairman William C. Morris bought 37,900 shares last week at prices that ranged from $16.46 to $18.23 per share and lifted his overall holding to 3.05 million shares. The Chairman acquired an additional 75,900 shares during the prior week at prices that fell between $14.72 and $18.67 per share. The oilfield services technology company has seen its shares decline by 49% over the past 12 months. Nonetheless, the stock appears to be in a bottoming out phase since late October and has gained 6% since the beginning of 2016. CARBO Ceramics Inc. (NYSE:CRR)’s business involves manufacturing and selling proppant products for use in the hydraulic fracturing of oil and natural gas wells. The company’s 2015 revenues dropped $368.8 million or 57% year-on-year to $279.57 million. The decrease was mainly due to a 48% reduction in the average North American rig count, which affected both proppant sales volumes and average selling prices. CARBO Ceramics has undergone a number of actions to lower its cost structure, which include workforce reductions, production output cuts, capital expenditures reductions and dividend suspension. Meanwhile, the company had $78.87 million in cash and cash equivalents on December 31, while its outstanding debt totaled only $88.0 million. The number of hedge funds from our system with stakes in CARBO increased to 11 from seven during the fourth quarter of 2015, with these funds amassing 9.70% of the company’s total outstanding shares. Steven Cohen’s Point72 Asset Management acquired a new stake of 287,300 shares in CARBO Ceramics Inc. (NYSE:CRR) during the December quarter.