Most insider trading watchers believe that insider buying is much more informative than insider selling, and rightly so. Officers and directors can sell shares for a wide variety of reasons such as portfolio diversification or tax obligations, which makes it particularly hard to accurately interpret insider selling. Moreover, as most officers receive stock options or other related instruments as part of their compensation packages, they usually sell two-to-three times more shares than they buy. Nonetheless, heavy insider selling, particularly in the form of clusters of insider selling, can raise red flags on some occasions. Although insider selling should not necessarily be interpreted as a bearish signal, this kind of activity can suggest that insiders believe their companies are approaching or even exceeding their “fair” market value. Insider Monkey processed numerous Form 4 filings disclosing insider selling submitted with the SEC on Tuesday and pinpointed three companies with notable insider selling.
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Genie Energy’s Founder Sells Massive Block of Shares
Let’s kick off our discussion by having a look at the insider selling witnessed at Genie Energy Ltd (NYSE:GNE). According to a fresh Form 4 filing, Chairman and Chief Executive Officer Howard S. Jonas, founder of Genie Energy, sold 263,713 Class B shares on Friday at a sale price of $6.32 per share. After the recent private sale of shares, Mr. Jonas continues to own 935,703 Class B shares and $1.57 million Class A shares. The founder of Genie Energy also holds an indirect ownership stake of 4.13 million Class B shares, which are held by the Howard S. Jonas 2014 Annuity Trust.
Genie Energy Ltd (NYSE:GNE) primarily consists of two businesses: Genie Retail Energy (GRE), which resells electricity and natural gas; and Genie Oil and Gas Inc. (GOGAS), an oil and gas exploration company whose projects include an oil and gas exploration project in Israel operated by subsidiary Afek Oil and Gas. The company recently received an extension of its license from the Israeli Ministry of Energy and Water through April 2017, but the news were accompanied by a sharp decline in the company’s share price. The main issue was that Afek finalized a well flow test on one of its completed wells (Ness 3), which did not find previously-anticipated levels of liquids hydrocarbons and “could not confirm the current commercial viability of the resource”.
The company’s Board of Directors recently decided to resume the payment of quarterly dividends on its Class A and Class B common stock, and paid a dividend of $0.06 per share for the fourth quarter of 2015. There were six hedge funds tracked by Insider Monkey with long positions in Genie Energy at the end of December, which amassed 6% of the company’s shares. Shares of Genie Energy are down 25% year-to-date. Irving Kahn’s Kahn Brothers owned 437,413 shares of Genie Energy Ltd (NYSE:GNE) at the end of 2015.