Battered Heritage Insurance Holdings Inc. (HRTG) Has Four Insiders Buy Shares; Four Other Companies See Noteworthy Insider Trading

People usually associate insider trading with illegal conduct as the media discusses numerous cases of insider trading on a weekly basis. For instance, a fresh article posted by Reuters shed some light on a story about a hedge fund manager who was charged earlier this week with trading on confidential information about drug approvals. Sanjay Valvani of Visium Asset Management LP was accused of receiving ill-gotten gains amounting to $25 million by gaining advance tips about U.S. Food and Drug Administration approvals of generic drug applications. However, not all forms of insider trading are illegal. As a general rule, there are two kinds of insider trading: legal and illegal. The illegal kind involves buying and selling securities based on material non-public information, which simply means that insiders trade on material knowledge the general public does not have yet. However, as long as corporate insiders play by the rules imposed by the SEC, they can easily buy and sell shares in their own companies. Insider Monkey keeps track of insider trading behavior and compiles a list of noteworthy insider transactions on a daily basis, so let’s have a look at several insider trades recorded with the SEC on Wednesday.

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).

Bedding Providers Has Executive Buy Shares amid Stock Price Weakness

Tempur Sealy International Inc. (NYSE:TPX) had one executive buy shares this week, after seeing three insiders piling up shares in May. Jay G. Spenchian, Executive Vice President and Chief Marketing Officer, purchased 7,000 shares on Wednesday for $58.37 each, lifting his overall holding to 15,800 shares. The world’s largest bedding provider has seen its market value plunge by 17% since the beginning of 2016. Tempur Sealy International Inc. (NYSE:TPX)’s both financial and stock performance have been weighted by a weaker-than-anticipated North American bedding market, as well as foreign currency headwinds. The mattress and bedding company recorded net sales of $721.0 million for the first quarter of the year, which decreased from $739.5 million reported in the first quarter of 2015. However, the company’s gross margin improved during the quarter, thanks to operational improvements such as sourcing improvements and lower commodity costs. Rehan Jaffer’s H Partners Management owned 7.00 million shares of Tempur Sealy International Inc. (NYSE:TPX) on March 31.

The next pages of this insider trading article reveals noteworthy insider transactions recorded at four other companies.

The CEO of U.S. Bond Insurer Buys Shares

The man in charge of Ambac Financial Group Inc. (NASDAQ:AMBC) bought some shares earlier this week as he has been buying consistently in the past several months. President and Chief Executive Officer Nader Tavakoli snapped up 21,574 shares on Monday for $16.22 each and 17,281 shares on the next day at $15.68 apiece. After the recent purchases, Mr. Tavakoli currently owns 234,742 shares. Let us remind you that earlier this year the U.S. bond insurer was under pressure from Canyon Capital Advisors LLC, a credit-focused hedge fund founded by Joshua Friedman and Mitchell Julis, that is said to have debt positions in securities insured by Ambac worth $376 million. The activist investor pressured Ambac Financial Group Inc. (NASDAQ:AMBC) to accelerate the settlement of $2 billion in insurance claims, but dropped its proxy fight against the company in mid-May after a number of large-scale shareholders said the proxy fight was counterproductive. Canyon also urged shareholders to vote against Ambac Board’s proposal on management compensation and numerous votes were gathered against this proposal (17.33 million votes for and 15.06 million votes against). Canyon Capital Advisors had 2.22 million shares of Ambac Financial Group Inc. (NASDAQ:AMBC) in its portfolio at the end of March.

Battered Property and Casualty Insurance Firm Witnesses Cluster of Insider Buying

Heritage Insurance Holdings Inc. (NYSE:HRTG) had a cluster of insider buying this week, which involved four different corporate insiders. To begin with, Board member Panagiotis Apostolou bought 4,952 shares on Tuesday at prices varying from $12.31 to $12.33 per share, lifting his ownership to 160,000 shares. Nicholas George Pappas, another member of the company’s boardroom, snapped up 1,000 shares on Wednesday for $12.32 each, after which he owns 66,595 shares. More importantly, Chairman and CEO Bruce Lucas purchased 15,700 shares on Tuesday at prices ranging from $12.26 to $12.60 per share, which boosted his overall holding to 810,355 shares. Irini Barlas, yet another Director, bought a new stake of 4,200 shares on the same day at a price tag of $12.45 per share. The shares of the Florida-based property and casualty insurance holding company are down 43% year-to-date and are trading nearly their 52-week low of $12.00 hit in early May. Heritage Insurance Holdings Inc. (NYSE:HRTG)’s disappointing first-quarter earnings report, released in early May, reflected the worst tornado losses in the company’s history. Cliff Asness’ AQR Capital Management owns 324,299 shares of Heritage Insurance Holdings Inc. (NYSE:HRTG) as of March 31.

Healthcare-Focused REIT Sporting Dividend Yield Above 6% Registers Insider Selling

Medical Properties Trust Inc. (NYSE:MPW) has seen numerous executives offload shares in the past several months, so let’s have a quick look at the most recent activity. Executive Vice President and Chief Financial Officer R. Steven Hamner sold 68,000 shares on Tuesday at a sale price of $14.74 per share, trimming his overall holding to 952,558 shares. The self-advised real estate investment trust focused on owning net-leased healthcare facilities across the U.S. has seen its market capitalization gain 28% since the start of 2016. Despite the impressive stock price appreciation, Medical Properties Trust Inc. (NYSE:MPW) continues to sport an exceptional dividend yield of 6.24%. In late May, the REIT’s boardroom approved a quarterly cash dividend of $0.23 per share, which compares to the dividend of $0.22 per share paid previously. The REIT pays out between 75% and 80% of adjusted funds from operations, which is among the best payout rations in the sector. Amy Minella’s Cardinal Capital has 3.66 million shares of Medical Properties Trust Inc. (NYSE:MPW) in its equity portfolio as of the end of March.

DoD Contractor Registers Insider Selling Near 52-Week High

Science Applications International Corp (NYSE:SAIC)’s Chief Financial Officer, John R. Hartley, unloaded 13,000 shares on Wednesday at prices ranging from $56.70 to $57.07 per share, which cut his ownership to 46,594 shares. Mr. Hartley also holds an indirect ownership stake of 6,259 shares, which is held through the SAIC Retirement Plan. The shares of the provider of technical, engineering and enterprise IT services to the U.S. government recently touched a new 52-week high of $61.93, after the stock has gained nearly 24% year-to-date. Earlier this month, Science Applications International Corp (NYSE:SAIC) announced its financial results for the first quarter of fiscal 2017 that ended May 6, disclosing revenues of $1.22 billion versus $1.01 billion posted for the same period of the prior year. Roughly 95% of the company’s top line in fiscal 2016 were derived from contracts with the U.S. government and more than 60% were generated from contracts with the Department of Defense. Joe Huber’s Huber Capital Management was the owner of 662,313 shares of Science Applications International Corp (NYSE:SAIC) at the end of the first quarter.

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