It is already common knowledge that corporate insiders are savvy long-term-oriented investors, as their purchases tend to beat broader market benchmarks on aggregate. Past research also indicates that uninformed outsiders can also earn strong returns by imitating insiders’ moves. Insider Monkey is a strong believer of the so-called insider trading anomaly and believes that investors would be wise to keep track of insider trading activity.
It is also believed that the trading behavior of those insiders who are more knowledgeable about the overall affairs of their firms, such as the chairman and other top-tier executives of companies, is an even more successful predictor of future stock performance. Numerous investors tend to focus on the insider trading activity registered at companies in the small- and mid-cap space, as these companies do not receive the same wealth of analyst coverage that large-cap companies such as Apple Inc. (NASDAQ:AAPL) do. Insider Monkey processed the relatively small number of Form 4 filings submitted with the SEC on Tuesday and pinned down three small-cap companies with noteworthy insider buying activity.
Through extensive research, we have determined that the due diligence that the investors in our database employ, as well as their long-term focus makes them perfect targets to emulate. However, the results of our analysis have also shown that the small-cap picks of these funds can generate much better returns, with the 15 most popular small-cap stocks beating the market by an average of 95 basis points per month (read more details here).
Retailer of Home Furnishings Registers Insider Buying Amid Stock Weakness
Bassett Furniture Industries Inc. (NASDAQ:BSET) recently registered the first insider buying at the firm in 2016, with two of its most informed insiders purchasing shares this past week. To start with, Chairman Emeritus Paul Fulton purchased 2,000 shares on Thursday at a weighted average cost of $23.96 per share, lifting his overall holding to 62,589 shares. More importantly, President and CEO Robert H. Spilman Jr. snatched up 4,000 shares on the same day at $23.64 apiece. After the recent purchase, Mr. Spilman currently holds a direct ownership stake of 185,513 shares.
The recent insider buying comes shortly after the retailer, manufacturer and marketer of branded home furnishings released its financial results for the second quarter of fiscal year 2016 ended May 28. Bassett Furniture Industries Inc. (NASDAQ:BSET)’s consolidated sales for the quarter dropped by 4.4% year-over-year to $106.7 million, only its second decline in quarterly revenue in four years. The company’s comparable store sales decreased by 3.6% year-over-year, with its 12 Texas stores accounting for more than two-thirds of the decrease. The company’s Bassett Home Furnishings store network comprises 58 company-owned stores and 32 licensee-owned stores, after Bassett Furniture Industries closed three underperforming stores during the first half of 2016. The retailer opened a new store during the second quarter and anticipates opening another one by the end of the year.
There were 11 hedge fund vehicles followed by Insider Monkey which were invested in the retailer of home furnishings at the end of March, amassing nearly 18% of the company’s outstanding common stock. Bassett’s shares are down by almost 3% thus far in 2016, mainly due to a 15% drop in the past month. Royce & Associates, founded by Chuck Royce, was the owner of 493,900 shares of Bassett Furniture Industries Inc. (NASDAQ:BSET) at the end of the first quarter.
The next page of this article will disclose the insider buying activity registered at two other companies.