While a wave of optimism has propelled U.S. stock markets to new highs since Donald Trump’s presidential-election victory, corporate insiders appear to be taking a contrarian approach to investing at the moment. According to data from provider of insider trading and news the Washington Service, a total of 3,500 insiders at Russell 3000 companies have discarded shares of their companies in the last three weeks and only 467 purchased shares. This compares with the monthly average of 1,832 sellers this year through October.
Wall Street analysts and investors watch closely insider trading data because Board members and executives are understood to have a better understanding about their companies’ business operations and future prospects than any of us, so their transactions may serve as great tips for outsiders. Hence, one may be worried that insiders’ behavior somewhat diverges from the one of investors, who have poured more capital into equities since Donald Trump’s surprising victory. Nonetheless, the big increase in insider selling may have a straightforward explanation: U.S. equities are reaching new all-time market highs. As insiders have a significant portion of their wealth tied up with their companies’ shares, some of them could want to diversify their holdings near all-time highs. Leaving this discussion aside, let’s have a look at a set of noteworthy insider transactions reported with the SEC on Friday.
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Board Member at Single-Family Property REIT Boost Stake Significantly
Let’s kick off our discussion by analyzing the recent insider buying observed at American Homes 4 Rent (NYSE:AMH). Board member Tamara Hughes Gustavson, the daughter of the founder of American Homes 4 Rent, bought 162,400 Class A shares on Thursday at prices that varied from $20.46 to $20.60 per share. Ms. Gustavson, the daughter of Chairman B. Wayne Hughes, currently holds an aggregate of 13.14 million shares following the recent purchase.
The shares of the publicly-traded REIT focusing on single-family rental homes have gained 24% since the beginning of the year. In mid-October, analysts at JMP Securities started coverage on American Homes 4 Rent (NYSE:AMH) with a ‘Market Outperform’ rating and a price target of $25, citing “outsized” expected rent growth over the next two to three years. The REIT’s core property revenues from same-home properties for the September quarter increased by 5.5% year-on-year to $107.15 million, reflecting higher average monthly rental rates and higher average occupancy levels. Jason Karp’s Tourbillon Capital Partners trimmed its position in American Homes 4 Rent (NYSE:AMH) by 21% during the third quarter to 7.82 million shares.
The next pages of this insider trading article will discuss fresh insider purchases and sales witnessed at other companies.