With nearly all companies included in the S&P 500 Index having released their earnings reports for the first quarter of 2016, the insider trading activity has been gaining steam in the past several weeks. According to FactSet, the blended first-quarter earnings drop totals 6.8%, which marks the fourth consecutive quarterly earnings decline. It is quite evident that the investment community is witnessing a so-called “earnings recession”, but there is good reason to believe the bottom-line figures of U.S.-listed companies will recover in the second half of 2016. Stabilizing crude oil prices, weakness of the U.S. dollar and improving U.S. economy are the main factors that will most likely end the so-called “earnings recession” in the foreseeable future. Meanwhile, last week’s overall dollar volume of all insider purchases slightly decreased relative to the volume recorded for the previous week, whereas the volume of insider selling increased week-over-week. Given that insider trading metrics play a major role in some investors’ investment strategies, the following article will discuss the most noteworthy insider buying and selling activity registered this past week.
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).
This Data Analytics Company Had Executive Chairman Buy a Massive Bulk of Shares Last Week
Executive Chairman of IDI Inc. (NYSEMKT:IDI)’s Board of Directors, Michael Brauser, purchased 419,530 shares on Wednesday at $5.25 apiece, all of which are held by Birchtree Capital LLC. Birchtree Capital, of which Mr. Brauser is the manager, currently owns 1.37 million shares. The Executive Chairman also holds an indirect ownership stake of 2.06 million shares held by Grander Holdings Inc., of which Mr. Brauser is a trustee, as well as a direct ownership of 63,400 shares excluding restricted stock units.
The data and analytics company has seen its market capitalization drop by 30% since the beginning of the year. IDI Inc. (NYSEMKT:IDI), formerly known as Tiger Media Inc., recorded total revenue of $39.42 million for the first quarter of 2016, up from a mere $1.26 million reported for the same quarter of 2015. The massive increase in the company’s top-line figure was mainly attributed to the acquisition of Fluent Inc., a leader in people-based digital marketing and customer acquisition, completed in December 2015. Israel Englander’s Millennium Management LLC owns 12,399 shares of IDI Inc. (NYSEMKT:IDI) as of the end of the March quarter.
Let’s head to the next two pages of this insider trading article, where we will reveal major insider purchases and sales witnessed at four other companies this past week.