Beacon Roofing Supply Inc. (BECN), National Retail Properties Inc. (NNN) and CNO Financial Group Inc. (CNO) See Insiders Sell Shares

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.

High Dividend-Paying REIT Sees CEO Unload Shares

The man in charge of National Retail Properties Inc. (NYSE:NNN) was caught selling some shares this past week. CEO Craig MacNab discarded 15,832 shares on Friday at $48.40 apiece, trimming his overall holding to 510,000 shares. Two other executives of this real estate investment trust sold shares earlier this month. Michelle Lynn Miller, Chief Accounting Officer and Executive Vice President, sold 2,500 shares on June 9 for $47.82 each, cutting her stake to 22,367 shares. Stephen A. Horn Jr., Chief Acquisitions Officer and Executive Vice President, unloaded 5,000 shares on June 3 at a price tag of $47.03 per share, which cut his holding to 107,424 shares.

The shares of the REIT focused on owning and developing properties leased to retail tenants are currently trading near their 52-week high of $49.27, after having advanced an impressive 22% year-to-date. National Retail Properties Inc. (NYSE:NNN)’s rental income for the first quarter of 2016 was $122.48 million, up 9.3% year-over-year. The increase was mainly driven by a partial year of rental income received from the acquisition of 46 properties, as well as a full year of rental income received from the acquisition of 221 properties in 2015. The REIT owned 2,293 properties at the end of March, 99% of which were leased to tenants operating in various sectors. The diversification is what makes National Retail Properties a stable and low-risk REIT, along with its blue chip clients such as Sunoco, Fitness, 7-Eleven, SunTrust Bank, among others.

The number of hedge funds from our system with long positions in the REIT increased to 13 from 11 during the first quarter of 2016. National Retail Properties currently pays out a quarterly dividend of $0.435 per share, which yields 3.54% annually. John Burbank’s Passport Capital acquired a new stake of 394,221 shares of National Retail Properties Inc. (NYSE:NNN) during the March quarter.

$2.9 Billion-Insurance Company Has Executive Sell Shares Ahead of Sharp Plunge

CNO Financial Group Inc. (NYSE:CNO) has also registered increased insider selling in the past several months, but let’s have a look at the most recent activity only. Christopher J. Nickele, Chief Actuary and Executive Vice President, sold 24,996 shares on Thursday at $19.25 apiece. Following the recent sale, Mr. Nickele currently holds an ownership stake of 74,975 shares.

The $2.88-billion insurance company, better known for its subsidiaries Bankers Life and Casualty, Washington National, and Colonial Penn, has seen its shares plunge by 12% in the past five trading sessions. Apparently, the plunge was triggered by Britons’ decision to leave the European Union on Thursday, so Mr. Nickele appears to have cashed out at the right moment. CNO Financial Group Inc. (NYSE:CNO) develops, markets and administers health insurance, annuity, individual life insurance and other insurance products in the United States. The company’s total premium collections for the first quarter of 2016 were $660.7 million, up 13% relative to the same period of the prior year. The increase reflects a jump in premiums from annuity products, as well as strong persistency in the Medicare supplement and life blocks of business.

There were ten hedge fund vehicles tracked by our team with stakes in the insurance company at the end of March, as compared to eight registered at the end of December. Those ten asset managers hoarded up nearly 6% of the company’s outstanding shares. Joe Huber’s Huber Capital Management reported ownership of 7.44 million shares of CNO Financial Group Inc. (NYSE:CNO) in its latest 13F.

Disclosure: None