What Triggered the Heavy Insider Selling Activity at These 3 Companies?

Statistics reveal that last week’s insider trading activity was significantly more intense than the activity registered in the week prior to that. In fact, insider buying more than doubled compared to the previous week, while insider selling more than tripled week-over-week. As a result, the ratio of insider selling over insider buying increased substantially last week, which might suggest that insiders were growing more bearish towards the market. Even so, one should not forget that insider selling may occur for various reasons unrelated to companies’ prospects, so this ratio does not necessarily indicate that insiders lost confidence in their individual companies. Thus, the following article will investigate the insider selling activity at three companies and will also attempt to lay out potential reasons that might have guided investors to sell stock.

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Range Resources Corp. (NYSE:RRC)‘s Executive Chairman and Director John H. Pinkerton reported selling 50,000 shares on Thursday at a sale price of $30.07 per unit of common stock, reducing his direct ownership stake to 857,864 shares. He also owns an indirect ownership stake of a few hundred thousand shares. The shares of the natural gas, natural gas liquids, and oil company have been on a steep decline this year, and are down by 43% year-to-date. Despite operating in a challenging environment, Range Resources Corp. (NYSE:RRC)’s third-quarter production increased by 20% year-over-year. Range’s management asserted that they have demonstrated capital discipline, enhanced operational efficiency, and implemented cost reductions, which enabled the company to reach its production targets and stay within its planned capital budget. The growing expectations of a warm winter ahead might serve as a potential reason why the Director unloaded a portion of his stake. John H. Scully’s SPO Advisory Corp owned 5.39 million shares of Range Resources Corp. (NYSE:RRC) on June 30.

Let’s now proceed with the discussion about the insider selling activity registered at an auto-parts maker and a media giant.

We can refocus our discussion on Lear Corporation (NYSE:LEA), an auto-parts maker that saw one of its directors sell stock last week. Donald L. Runkle, who has been a Director of Lear since 2009, unloaded 5,206 shares on Thursday at prices ranging from $124.23 to $124.73, trimming his stake to 7,844 shares. The shares of the supplier of automotive seating and electrical distribution systems are currently trading at their all-time high of slightly over $125, after having gained 27% year-to-date. Lear Corporation (NYSE:LEA)’s recently-published third quarter earnings report saw it deliver sales of $4.3 billion, which were up from $4.2 billion reported a year ago. Similarly, the company’s net income came to $181 million, compared to $140 million reported last year. Lear Corporation also increased its full-year earnings and cash flow guidance, all of which has propelled its stock to new levels; thus, it is no surprise to see insiders unload their holdings at the moment. However, the stock is still trading cheaply, bearing in mind its trailing P/E ratio of 12.80. Ken Griffin’s Citadel Investment Group was one of the top equity holders of Lear Corporation (NYSE:LEA) at the end of the second quarter, with 1.39 million shares.

Last but not least, Comcast Corporation (NASDAQ:CMCSA) has also seen unusually high insider selling activity recently. Brian L. Roberts, Chairman, President and Chief Financial Officer, offloaded 106,883 shares of Class A common stock on Thursday at a weighted average price of $63.10 and currently holds a direct ownership stake of 639,548 shares. In a recent proxy filing, Comcast said Roberts held some 5.74 million class A shares, 8.16 million shares of special class A stock, as well as 9.44 million class B shares (he is the 100% holder of the class B stock). Comcast Corporation (NASDAQ:CMCSA) has seen another insider sell stock recently, but we are not discussing this insider sale, as it was conducted under a trading plan. The shares of the media and technology company are up by almost 8% year-to-date and seem to be fairly priced at the moment, considering their trailing P/E of 19.63. Just recently, Pacific Crest Securities lowered their price target on the stock to $65 from $67, while maintaining an ‘Overweight’ rating on it. Jacob Rothschild’s RIT Capital Partners acquired a 1.04 million-share stake in Comcast Corporation (NASDAQ:CMCSA) during the second quarter.

Correction: This article was corrected to reflect the accurate information related to the total holding of Brian Roberts in Comcast Corporation. 

Disclosure: None