Adobe Systems (ADBE) and Bed Bath & Beyond (BBBY) Witness Insider Selling, While This Pharmaceutical Company’s CEO Just Bought Shares

Insider trading activity has been relatively weak this week, as the first quarter earnings season kicked off on Monday. With most companies having quiet periods in place prior to quarterly earnings announcements, the insider buying activity in particular has been very low. According to S&P Capital IQ, first quarter earnings are expected to decline by 8.1% year-over-year, which would mark the worst quarterly drop since 2009. Notably, this earnings period will enable investors to better understand the health of the U.S energy sector, as Wall Street banks are anticipated to reveal whether they have been building up more reserves to cover possible losses from troubled energy companies. Indeed, the oil and natural gas sector is expected to put significant weight on first quarter earnings. Leaving the discussion about earnings aside, this article will discuss several noteworthy insider transactions reported with the SEC on Tuesday. Precisely, we will examine the insider buying activity registered at a pharmaceutical company and the insider selling witnessed at two other companies.

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This Pharmaceutical Company’s CEO Buys Sizable Block of Shares

OHR Pharmaceutical Inc. (NASDAQ:OHRP) had its most powerful executive buy a sizable block of shares earlier this week. Chief Executive Officer Jason Scott Slakter bought 6,250 shares on Monday at $3.35 apiece, lifting his ownership to 884,504 shares. Dr. Slakter also holds an indirect ownership stake of 697,865 shares, which is held by SKS Ocular I LLC.

OHR Pharmaceutical is a pharmaceutical company that focuses on developing novel therapeutics and delivery technologies for the treatment of ocular diseases. The company’s lead clinical program, known as OHR-102 eye drops, represents a therapeutic product that is said to offer a non-invasive therapy to improve vision outcomes without requiring multiple injections per office visit. OHR Pharmaceutical Inc. (NASDAQ:OHRP) is currently evaluating OHR-102 eye drops for the treatment of retinal diseases such as wet-AMD, retinal vein occlusion, and proliferative diabetic retinopathy. The company has several other active programs that are studying molecules and approaches for the treatment of glaucoma, steroid induced glaucoma, ocular allergy, and retinal disease. Going back to the company’s lead clinical program, OHR’s management recently announced the commencement of two planned Phase III clinical studies that are set to evaluate the efficacy and safety of OHR-102, also known as Squalamine, in combination with Lucentis injections for the treatment of neovascular age-related macular degeneration, or wet-AMD.

Analysts at Roth Capital Partners have a ‘Buy’ rating on the ophthalmology research and development company, along with a price target of $30 on its shares, suggesting considerable upside of about 900%. Furthermore, Roth Capital’s price target is solely based on a Net Present Value analysis for the aforementioned OHR-102 in wet-AMD, and that in the United States alone. The investment banking firm said last year that “OHR-102 may reach ~1.3B in U.S. annual sales by 2023” as long as OHR launches the drug in 2019. OHR’s shares have plummeted by 46% since the beginning of 2016, but are up by 20% in the past year. There were six hedge funds which we track at Insider Monkey which had stakes in the pharmaceutical company at the end of December, amassing a mere 2% of its outstanding shares. Baker Bros. Advisors, managed by Julian Baker and Felix Baker, owns 370,370 shares of OHR Pharmaceutical Inc. (NASDAQ:OHRP) as of the end of 2015.

On the next two pages of this insider trading article, we’ll discuss the insider selling witnessed at Bed Bath & Beyond Inc. (NASDAQ:BBBY) and Adobe Systems Incorporated (NASDAQ:ADBE).

This Struggling Retailer Sees Co-Founder Sell Massive Blocks of Shares

Bed Bath & Beyond Inc. (NASDAQ:BBBY) has had one of its most important corporate insiders make a number of large insider sales over the past several trading sessions. Warren Eisenberg, Co-Founder of Bed Bath & Beyond and Co-Chairman since 1999, sold 177,167 shares on Friday, 361,544 shares on Monday and 100,000 shares on Tuesday, at prices that ranged from $47.00 to $49.03 per share. The executive exercised 165,970 employee stock options on Friday, which accounts for a portion of the shares sold. Mr. Eisenberg also reported the sale of 321,126 shares at prices varying from $47.00 to $49.03 per share, which were owned by Maxine Eisenberg, Mr. Eisenberg’s spouse. The Co-Chairman also holds an indirect ownership stake of 869,855 shares, which is held by trusts for the benefit of Mr. Eisenberg and his family members.

Bed Bath & Beyond is a retailer that sells a wide range of domestic merchandise and home furnishings, which include categories such as bed linens, bath items and kitchen textiles, as well as kitchen and tabletop items, fine tabletops, and basic housewares, to name just a few. The shares of the home goods retailer were freefalling from the beginning of 2015 until mid-February of this year and the company has seen its market value decline by 35% in the past 12 months, though its market capitalization has stabilized in the past three months, being up by 6%. Bed Bath & Beyond’s net sales for fiscal year 2015 that ended February 27 reached $12.10 billion, up from $11.88 billion reported for fiscal year 2014. The company’s comparable sales grew by roughly 1.0% during fiscal year 2015, after increasing by 2.4% in fiscal year 2014. Meanwhile, fiscal year 2015 net earnings fell by $115.98 million year-over-year to $841.49 million. Net earnings per diluted share did reach $5.10 however, up from $5.07 per diluted share in the previous fiscal year. It is important to note that the company’s Board did authorize a quarterly dividend program along with its latest earnings, the first time in its 24-year history as a publicly-traded company that will make dividend payments to shareholders. The quarterly dividend of $0.125 per share provides a current dividend yield of 1.05%. Shares of Bed Bath & Beyond are currently trading at a forward P/E multiple of 9.2, below the forward P/E ratio of 11.7 for the household appliances sector.

The hedge fund sentiment towards the home goods retailer declined in the final quarter of 2015, with the number of funds invested in the company dropping to 23 from 33 quarter-over-quarter. David Harding’s Winton Capital Management reported ownership of 1.65 million share of Bed Bath & Beyond Inc. (NASDAQ:BBBY) through the round of quarterly 13Fs filings for the December quarter.

Intensifying Insider Selling at Adobe Systems as Stock Trades Near All-Time High

Let’s wrap up our discussion by looking into the insider selling registered at Adobe Systems Incorporated (NASDAQ:ADBE). Co-Chairman John E. Warnock, who co-founded the graphics and publishing software company in 1982, unloaded 5,000 shares on Tuesday at prices that fell between $93.29 and $93.32 per share, all of which were held by the Warnock Family Trust. Mr. Warnock sold an additional 5,000 shares last Thursday at prices ranging between $93.67 and $93.69 per share. After the recent transactions, the Warnock Family Trust continues to own 577,703 shares, while Mr. Warnock holds an additional direct ownership stake of 22,868 shares.

The shares of Adobe Systems are currently trading near their all-time high of $98 reached on March 18, after gaining 23% in the past 12 months. Although activist hedge fund ValueAct Capital, run by Jeffrey Ubben, and corporate insiders have been unloading their Adobe holdings in the past several months, analysts believe that the shares of the cloud-based graphics and publishing software company may yet have more room to run. Specifically, analysts at FBR Capital Markets recently upped their price target on Adobe Systems to $115 from $110 and reiterated their ‘Market Perform’ rating on the stock, estimating that the company will reach revenue growth of more than 20% and earnings per share growth of more than 30% over the next two years. This massive growth is mainly attributable to the company’s transition from a perpetual license pricing model to a subscription-based pricing model, also known as the software-as-a-service model. Adobe Systems is a highly-diversified software company that offers various products and services for creating and managing digital content, while its primary source of growth comes from its Digital Media business called the Creative Cloud. The Creative Cloud is a subscription service that allows customers to download and install up-to-date versions of its multiple products, including Adobe Photoshop, Adobe Illustrator, and Adobe Premiere Pro, among others.

Adobe Systems appears to have a relatively rich valuation at the moment if bearing in mind its forward P/E multiple of 24.6. However, the company’s expected growth seems to justify the somewhat high valuation. The hedge fund sentiment towards the company increased in the final quarter of 2015, with the number of funds bullish on the company climbing to 46 from 42 quarter-over-quarter. Stephen Mandel’s Lone Pine Capital had 4.01 million shares of Adobe Systems Incorporated (NASDAQ:ADBE) in its portfolio at the end of December.

Disclosure: None