Although financial markets are already showing signs of stabilizing after the United Kingdom voted to leave the European Union on Thursday, some corporate insiders may seek to diversify their holdings amid increased volatility and uncertainty in equity markets. But why would anyone care about what insiders are doing? Well, past research concludes that corporate insiders are good at trading securities and that’s why investors keep track of insider trading metrics.
Insider buying activity appears to be relatively straightforward to interpret, but insider selling is much more complex. Retail investors tracking insider trading activity need to learn how to decode the information in insider trades. Insiders, namely executives and Board members, sell shares for a wide range of reasons, so “routine” insider selling may not be informative for the future of publicly traded companies. But how could investors strip away these so-called routine trades and pin down only information-rich trades? One should ignore insider selling activity driven by diversification or liquidity reasons, which means ignoring insider selling conducted under pre-arranged trading plans or selling related to freshly-exercised stock options. That said, let’s have a look at several possible information-rich insider sales recently registered at three companies.
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).
Leading Distributor of Roofing Materials Registers Insider Selling
Beacon Roofing Supply Inc. (NASDAQ:BECN) had one of its most informed insiders offload shares this past week. Robert R. Buck, Chairman of the company’s boardroom and former CEO, sold 17,556 shares on Thursday at prices varying from $45.07 to $45.63 per share. After the recent sale, Mr. Buck continues to own 31,545 shares.
The largest publicly traded distributor of residential and non-residential roofing materials in the United States and Canada has seen its market value gain 4% since the beginning of 2016. In early October of 2015, Beacon Roofing Supply Inc. (NASDAQ:BECN) completed the $1.2 billion-acquisition of roofing products distributor Roofing Supply Group, which strengthened the company’s position as one of the largest distributors of roofing materials. The company has completed a series of acquisitions thus far in 2016, with the latest being the acquisition of Oregon-based distributor of residential roofing and related products Woodfeathers. The company’s net sales for the first three months of 2016 were $823.54 million, up from a mere $413.18 million reported a year ago. Meanwhile, Beacon Roofing’s existing market sales jumped by 27.7% year-over-year, so the company has been growing both organically and through acquisitions. The distributor of roofing materials had 357 branches in operation at the end of March, with 111 branches acquired in 2016. 25 branches were closed in the first three months of the year as a result of facility consolidations.
The number of asset managers followed by Insider Monkey with long positions in the roofing specialist rose to 29 from 24 during the first quarter of 2016. Those 29 money managers accumulated nearly 15% of the company’s total number of outstanding shares. Ken Fisher’s Fisher Asset Management was the owner of 1.71 million shares of Beacon Roofing Supply Inc. (NASDAQ:BECN) on March 31.
The next page of this insider trading article will reveal the insider selling registered at two other companies.