CEO of Low-Priced Syringe Maker Buys 2 Million Shares, Plus Other Noteworthy Insider Trading

Uninformed investors usually associate insider trading with illegal conduct, but not all insider trading activity is illegal. In fact, most corporate insiders buy and sell securities completely within the parameters of the law. Despite witnessing an incremental number of cases of illegal insider trading, most insiders tend to play by the rules imposed by the U.S. Securities and Exchange Commission when buying or selling shares.

But what is the difference between legal and illegal insider trading? Let’s have a quick look at a somewhat old insider trading scandal to draw a line between the two types of activity. In 2013, the former CEO of ImClone, Samuel Waksal, sold a $5 million stake, as well as his daughters’ holdings in the company, after finding out that the Food and Drug Administration had rejected ImClone’s main drug for cancer treatment. Mr. Waksal traded on material non-public information, for which he was sentenced to seven years in prison and fined $3 million after pleading guilty to insider trading and fraud. This example shows that corporate insiders, especially top-tier executives, have more up-to-date information about their company’s current developments and future prospects than anyone else. Leaving this discussion aside, the following article will discuss recent noteworthy insider trading activity registered at five publicly traded companies.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

CEO of Low-Priced Syringe Maker Buys 2 Million Shares

To begin with, the man in charge of Retractable Technologies Inc. (NYSEMKT:RVP) bought a massive block of shares last week. President and Chief Executive Officer Thomas J. Shaw snapped up a huge lot of 2 million shares on Thursday, at a price of $0.89 per share. Mr. Shaw, the founder of Retractable Technologies, currently holds a direct ownership stake of 12.07 million shares following the purchase.

The shares of the maker of safety syringes have plunged by 66% in the past year, reflecting a massive drop in early-December after the Fifth Circuit Court of Appeals tossed an antitrust verdict against Becton Dickinson and Co (NYSE:BDX) in a suit that had awarded rival syringe maker Retractable Technologies Inc. (NYSEMKT:RVP) $340 million. Retractable Technologies previously accused Becton of infringing on its syringe patents, falsely advertising its needles, as well as attempting to monopolize the syringe market. Although the low-priced syringe maker allegedly has the most foolproof safety needle on the market, the company was rejected by a high number of hospitals that its salespeople had visited because those hospitals were bound by agreements to buy from incumbent companies. Andy Redleaf’s Whitebox Advisors had around 171,000 shares of Retractable Technologies Inc. (NYSEMKT:RVP) in its portfolio at the end of September.

The next two pages of this insider trading article will discuss the fresh insider buying and selling recently observed at four other companies.

Board Member of Office REIT Participates in Public Offering

One member of City Office REIT Inc. (NYSE:CIO)’s Board purchased a rather sizable block of shares last week as well. Board member Jeffrey D. Kohn bought 20,161 shares on Friday at a price tag of $12.40 each, lifting his overall holding to 223,861 shares.

Although the Form 4 filing submitted by Mr. Kohn does not contain such information, it appears that the Board member purchased the shares through the recently-held underwritten public offering of 5.75 million shares. The real estate investment trust focused on owning and acquiring office properties raised $71.3 million in the offering, which will likely be used to acquire office properties, repay amounts outstanding under its secured credit facility, as well as fund future acquisitions and investments. City Office REIT Inc. (NYSE:CIO) owns and has an interest in 4.4 million square feet of office properties. The six asset managers in our system that were invested in the office REIT at the end of the third quarter amassed roughly 7% of the company’s outstanding common stock. City Office’s shares are up by 12% in the past 12 months. Jim Simons’ Renaissance Technologies was the equity holder of 575,320 shares of City Office REIT Inc. (NYSE:CIO) at the end of the September quarter.

Board Member of Expanding Provider of Clean Energy Providers Buys Shares

A member of Tecogen Inc. (NASDAQ:TGEN)’s Board of Directors has been piling up more shares over the past several weeks. Charles T. Maxwell, a member of Tecogen’s Board since 2001, snatched up 25,000 shares on January 6 at a price of $4.00 per share. Mr. Maxwell purchased an additional 11,000 shares for $3.85 each and 1,000 shares at $3.84 apiece two days earlier. After these transactions, the director currently owns an aggregate of 129,769 shares.

Tecogen Inc. (NASDAQ:TGEN), which designs and manufactures cogeneration systems that produce combinations of electricity, hot water and air conditioning using automotive engines specially adapted to run on natural gas, has seen the value of its shares advance by 28% in the past year. In early-November, the provider of clean energy products agreed to acquire American DG Energy Inc. (NYSEMKT:ADGE) in a stock-for-stock merger, a transaction set to be completed in the first-half of this year. The all-stock merger creates a vertically-integrated clean technology company that will provide equipment design, manufacturing, installation, financing, and long-term maintenance services. Israel Englander’s Millennium Management reported ownership of 33,418 shares of Tecogen Inc. (NASDAQ:TGEN) in its 13F filing for the September quarter.

Let’s head to the final page of the article, where we’ll discuss the fresh insider selling observed at two companies.

Cluster of Insider Selling at Ethanol Company, CEO Among Sellers

Several top-tier executives at REX American Resources Corp (NYSE:REX) offloaded shares in the past two weeks or so. To begin with, Stuart A. Rose, the Executive Chairman of the Board, sold 7,936 shares on Friday at prices ranging from $89.90 to $92.00 per share, as well as discarded an additional 5,610 shares two days earlier at prices that fell between $94.50 and $94.60 per share. Following these transactions, Mr. Rose currently owns a total of 574,206 shares. Douglas L. Bruggeman, Chief Financial Officer, Vice President of Finance and Treasurer, sold 2,000 shares on Thursday at prices varying from $92.20 to $92.56 per share, cutting his ownership to 28,151 shares. Last but not least, CEO and President Zafar A. Rizvi liquidated 16,000 shares last Tuesday at a price tag of $95.65 each, a sale that trimmed his overall holding to 43,162 shares.

Mr. Rose, the former CEO and current Executive Chairman, as well as the other insiders at the ethanol company have been selling shares in recent months as REX shares have gained an impressive 92% in the past year. While insiders have been offloading shares, investment group BlackRock Inc. (NYSE:BLK) has been boosting its stake in the alternative energy company as of late. According to fresh SEC filings, BlackRock holds a 10.1%-stake in REX and represents the largest investor in the biofuel company. Renaissance Technologies had 525,600 shares of REX American Resources Corp (NYSE:REX) in its portfolio at the end of the third quarter.

Executive at Provider of IT Services to the U.S. Government Offloads Shares

One member of Science Applications International Corp (NYSE:SAIC)’s management team unloaded some shares last week. Nazzic S. Keene, Sector President of Global Markets and Missions at the company, sold 10,494 shares on Thursday at a price of $84.00 per share. Ms. Keene owns an aggregate of 19,383 shares after the recent sale.

The provider of technical, engineering and enterprise information technology services, predominantly to the U.S. government, has seen the value of its stock skyrocket by 96% in the past 12 months, so the insider sale mentioned above should not come as a surprise to the investment community. Science Applications International Corp (NYSE:SAIC)’s revenue for the nine months that ended November 4 increased by $180 million to $3.42 billion, mainly reflecting revenue earned on contracts obtained through the acquisition of Scitor Holdings. SAIC acquired the privately-held provider of technical services to the U.S. intelligence community and other U.S. government customers in early-May of 2015. Ken Griffin’s Citadel Advisors owned 39,131 shares of Science Applications International Corp (NYSE:SAIC) at the end of the third quarter.

Disclosure: None