CEOs of Leggett & Platt Inc. (LEG) and Magellan Midstream Partners L.P. (MMP) Trim Equity Stakes; Other Insider Trading

The profitability of insider trading has been studied in numerous studies over the past several decades, with most studies concluding that corporate insiders are better informed about their company’s future prospects than market analysts, retailer investors, asset managers or journalists. Most studies ended up concluding that insiders trade profitably on the “privileged” information they they access to.

Most of these studies find that insiders earn significant abnormal returns when purchasing securities, as well as conclude that purchases are more informative than sales. At the end of the day, there’s a wide range of reasons to sell shares, such as liquidity needs or portfolio diversification, but the fundamental reason for buying shares is to make a profit. Past research also shows corporate insiders are extremely good at timing their transactions, as they successfully follow the pattern of buying low and selling high. In fact, the contrarian approach to investing employed by insiders serves as one explanation for their trading success. All in all, retail investors may find insider trading metrics very useful for their stock selection and analysis processes. Without further ado, let’s discuss a set of noteworthy insider transactions reported with the SEC on Tuesday.

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Two Insiders at Convenience Store Operator Buy Shares After Earnings Release

To start with, let’s have a quick look at the insider buying activity at Murphy USA Inc. (NYSE:MUSA), where two insiders purchased shares at the beginning of the week. Board member Claiborne P. Deming bought 15,000 shares on Tuesday at a price tag of $65.39 each, boosting his ownership to 233,989 shares. Senior Vice President John P. Corrigan initiated a new stake of 500 shares on Monday at $66.48 apiece, as well as purchased an additional 500 shares on Tuesday for $65.61 each.

The marketer of retail motor fuel products and convenience merchandise has seen the value of its shares advance by 8% in the past year. Murphy USA Inc. (NYSE:MUSA) recently released its financial results for the three and twelve months that ended December 31, reporting net income of $221.5 million for the full year 2016 versus $176.3 million in 2015. The bottom-line figure grew year-over-year despite operating in the weakest retail fuel margin environment since 2010, thanks to a more efficient operating structure. The company added 37 new stores during the fourth quarter, bringing the total count to 1,401 locations at the end of the year. Murphy USA anticipates to generate net income in the range of $140-to-$190 million in 2017. Matthew Tewksbury’s Stevens Capital Management trimmed its position in Murphy USA Inc. (NYSE:MUSA) by 41% during the fourth quarter to around 24,000 shares.

The next pages of this article discuss fresh and noteworthy insider buying and selling observed at several other companies.

Mini-Cluster of Insider Buying at Large Producer and Transporter of Energy

Two insiders at Dominion Resources Inc. (NYSE:D) filed Tuesday to disclose the purchase of some shares. To begin with, Board member Michael E. Szymanczyk snatched up 10,000 shares on Friday at prices varying from $71.59 to $71.75 per share, all of which are held in the Szymanczyk Family Joint Trust that owns 25,000 shares after the purchase. Mr. Szymanczyk also holds a direct ownership stake of 11,278 shares. Susan N. Story, yet another member of the company’s boardroom, bought 1,000 shares on the same day at $71.90 apiece. Ms. Story currently owns an aggregate of 1,562 shares following the Friday purchase.

The insider purchases come immediately after the large producer and transporter of energy released its financial results for the fourth quarter. Dominion Resources Inc. (NYSE:D) issued a discouraging operating earnings guidance of $3.40-to-$3.90 per share for 2017, which implies a decline of 3.9% from 2016 at the midpoint. Increased revenues from growth projects and the recently-completed acquisition of Rockies-based integrated natural gas company Dominion Questar are expected to positively impact the company’s operating earnings going forward. The company anticipates growth to resume in 2018, when operating earnings are expected to increase by at least 10%, as well as expects operating earnings to continue growing at a compound annual rate of 6%-to-8% through 2020. The shares of Dominion Resources, which plans to change its name to Dominion Energy, are up 2% in the past 12 months. Russell Lucas’ Lucas Capital Management owned 3,275 shares of Dominion Resources Inc. (NYSE:D) at year-end.

CEO of Magellan Midstream Partners Sells Shares

Let’s shift focus toward the noteworthy insider sales reported with the SEC on Tuesday, starting with the insider selling at Magellan Midstream Partners L.P. (NYSE:MMP). President and CEO Michael N. Mears offloaded 50,000 shares on Friday at prices that fell between $78.50 and $79.20 per share. Mr. Mears owns a total of 184,440 common units after the sale.

The shares of the publicly-traded limited partnership engaged in the transportation, storage and distribution of refined petroleum products and crude oil have gained 32% in the past year. Magellan Midstream Partners L.P. (NYSE:MMP) recently announced the closure of its pipeline in Worth Country, Iowa, after spilling around 3,300 barrels of diesel fuel. A couple of days later, the company said that only 1,115 barrels of diesel spilled from its refined products pipeline, significantly lower than original estimates. The spill might have come at the most inopportune time, as pipeline safety has become a hot topic of discussion in the United States. Protesters and environmental activists rallied against plans to pass the Dakota Access pipeline beneath a lake near the Standing Rock Sioux reservation, arguing that the pipeline would threaten water resources and sacred Native American sites. J. Alan Reid’s Forward Management added a stake of 148,226 shares in Magellan Midstream Partners L.P. (NYSE:MMP) to its portfolio during the fourth quarter.

The very last page of this article reveal some insider selling recently seen at two other companies.

CEO of Diversified Leggett & Platt Offloads Shares

The man in charge of Leggett & Platt Inc. (NYSE:LEG) also unloaded a large amount of shares earlier this week. President and CEO Karl G. Glassman sold 79,772 shares on Monday at a price tag of $48.74 each, cutting his ownership to 416,859 shares.

Leggett & Platt Inc. (NYSE:LEG), which makes mattress springs, wire, in-store product displays and car-seating systems, has seen its market capitalization rise by 18% in the past year. The company reported full-year sales of $3.75 billion for 2016, down 4% year-over-year. The impact of unit volume growth of 2% and acquisitions-fueled sales growth was more than offset by divestitures, raw material-related price deflation and currency impact. Nevertheless, Leggett & Platt reported record continuing operations earnings-per-share of $2.62, which increased by 15% year-on-year. The company plans to deliver a total shareholder return (i.e. the combined return of capital gains and dividends) that ranks in the top third of the S&P 500 over rolling three-year periods. For the three years that ended December, Leggett & Platt generated an average TSR of 20% per annum, which enabled the company to reach the top 11% of companies in the S&P 500. Matthew Tewksbury’s Stevens Capital Management had around 74,000 shares of Leggett & Platt Inc. (NYSE:LEG) in its portfolio at the end of December.

Insiders at Strong-Performing Analog Chipmaker Keep Selling Shares

Although we discussed a cluster of insider selling at Texas Instruments Incorporated (NASDAQ:TXN) earlier this month, insiders at the company keep trimming their positions. For instance, Chief Operating Officer Brian T. Crutcher liquidated 42,550 shares on Friday at prices that fell between $76.21 and $76.32 per share, reducing his ownership to 201,284 shares. Mr. Crutcher also has an indirect ownership stake of 102,899 shares held in a trust for the benefit of family members.

Texas Instruments Incorporated (NASDAQ:TXN), which designs and sells semiconductors to electronics designers and manufacturers, has seen the value of its shares advance by 50% in the past 12 months. The huge volume of insider selling comes after the analog chipmaker released stronger-than-expected financial results for the final quarter of 2016. Texas Instruments, usually viewed as a barometer for the semiconductor industry, reported revenue of $3.41 billion for the December quarter, up by 7.1% year-over-year. This figure beat analysts’ expectations of $3.32 billion. Mehdi Mahmud-led First Eagle Investment Management upped its stake in Texas Instruments Incorporated (NASDAQ:TXN) by 13% during the fourth quarter to 5.25 million shares.

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