CEOs of Parsley Energy Inc. (PE) and Hecla Mining Company (HL) Are Discarding Shares, Plus Insider Buying at 3 Other Companies

According to a fresh article written by the Wall Street Journal, a former partner at law firm Hunton & Williams LLP and his investment adviser were charged with participating in an insider-trading scheme ahead of Pfizer Inc. (NYSE:PFE)’s acquisition of King Pharmaceuticals in 2010. Prosecutors said Robert Schulman, a lawyer at Hunton & Williams, tipped off his investment adviser about a pending merger between Pfizer and King Pharmaceuticals, with the two men and their co-conspirators generating more than $400,000 in ill-gotten gains by trading King shares ahead of the deal. This is just one of the many insider trading scandals making headlines on a weekly basis.

Investors usually associate insider trading with illegal conduct, but only a small portion of insider trading activity is illegal. In fact, most corporate insiders buy and sell securities in a perfectly legal way. Illegal insider trading involves transactions completed by insiders who had access to material non-public information, be it related to acquisition announcements, earnings releases or other significant news events. Outsiders might find it difficult to draw a line between legal and illegal insider trading, as most corporate insiders have superior knowledge about their companies’ business developments, current challenges and future prospects than any of us. That said, this article will discuss a set of notable insider transactions reported with the SEC on Wednesday.

Academic research has shown that certain insider purchases historically outperformed the market by an average of seven percentage points per year. This effect is more pronounced in small-cap stocks. Another exception is the small-cap stock picks of hedge funds. Our research has shown that imitating the 15 most popular small-cap stocks among hedge funds outperformed the market by nearly a percentage point per month between 1999 and 2012 (read more details here).

Studio Behind “The Hunger Games” Registers Insider Buying

Earlier this week, Lions Gate Entertainment Corp. (USA) (NYSE:LGF) registered the first insider purchase of the year. Board member Gordon Crawford bought 50,000 shares on Tuesday for $21.70 each, boosting his overall holding to 295,020 shares.

In late June, the studio known for “The Hunger Games” movies agreed to acquire premium television network Starz (NASDAQ:STRZA) in a cash-and-stock deal valued at $4.4 billion. Analysts believe the deal will enable Lions Gate Entertainment Corp. (USA) (NYSE:LGF) to diversify its business and make financial performance less dependent on whether the company delivers a hit movie or not. The company’s revenues for the three-month period that ended June 30 grew by 35.4% year-over-year to $553.6 million, partially reflecting a strong performance of the move “Now You See Me 2.” Lions Gate shares are 34% in the red year-to-date. A total number of 32 hedge funds followed by Insider Monkey had stakes in the well-known studio at the end of March, amassing 29% of the company’s total number of outstanding shares. Sander Gerber’s Hudson Bay Capital Management acquired a new stake of 23,000 shares of Lions Gate Entertainment Corp. (USA) (NYSE:LGF) during the June quarter.

The second page of the article will disclose fresh insider buying registered at two companies, while the final page of the article will discuss notable insider selling at two other firms.

Drug Wholesale Company Also Sees Board Member Pile Up Shares

AmerisourceBergen Corp. (NYSE:ABC) also saw a member of its board purchase some shares earlier this week. Director Lon R. Greenberg snapped up 4,000 shares on Tuesday at a price tag of $88.59 each. After the recent purchase, Mr. Greenberg currently owns 9,500 shares.

The global pharmaceutical sourcing and distribution services company has seen its market cap drop by 15% since the start of the year. AmerisourceBergen Corp. (NYSE:ABC)’s revenue for the three-month period that ended June 30 grew by 7.7% year-over-year to $36.88 billion. The increase in the company’s top line partially reflects the acquisition of MWI Veterinary Supply Inc., an animal health distribution company in the United States and the United Kingdom. Thanks to the strong performance delivered in the June quarter, the drug wholesale company raised its earnings per share estimate for the fiscal year ending September 30 to the range of $5.52-to-$5.57, up from the previous guidance of $5.44-to-$5.54. Ray Dalio’s Bridgewater Associates upped its stake in AmerisourceBergen Corp. (NYSE:ABC) by 31% during the June quarter to 319,092 shares.

U.S. Provider of Dredging Services Registers Insider Buying

Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) was yet another company that registered noteworthy insider buying at the beginning of the week. Board member Robert B. Uhler acquired 35,000 shares on Tuesday at a price of $4.02 per share, which boosted his ownership to 46,116 shares.

The largest provider of dredging services in the United States and a major provider of environmental and infrastructure services has seen the value of its stock gain a little less than 1% year-to-date. The company’s dredging revenues earned from contracts with federal government agencies, including the U.S. Army Corps of Engineers and federal entities such as the U.S. Coast Guard and the U.S. Navy, were around 66% of overall dredging revenues for the first half of the year. Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD)’s second-quarter total revenue was $192.2 million, down from $238.9 million posted in the second quarter of 2015. Bernard Selz’s Selz Capital LLC added a 50,000-share position in Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) to its portfolio during the June quarter.

Successful Independent Oil and Natural Gas Company Registers Massive Cluster of Insider Selling

Parsley Energy Inc. (NYSE:PE) had a massive cluster of insider selling this week, which might unnerve even the most seasoned investors. To begin with, Board member David H. Smith sold 6,250 Class A shares on Monday at prices of approximately $32.99 per share, cutting his overall holding to 30,861 shares. More importantly, President and CEO Bryan Sheffield discarded a whopping 1.10 million Class A shares on the same day for $32.15 each, trimming his direct ownership stake to 13.17 million Class A shares. The founder of Parsley Energy also owns 20.72 million Class B shares, where each share has no economic rights but entitles holders to one vote on all matters. Colin Roberts, General Counsel and Secretary since April 2013, offloaded 25,000 shares on Monday at prices varying from $32.66 to $32.98 per share, which cut his holding to 243,770 shares.

The shares of the independent oil and natural gas company focused on the acquisition and development of unconventional oil and natural gas reserves in the Permian Basin are up an impressive 80% since the start of the year. Parsley Energy Inc. (NYSE:PE)’s total revenues for the three months that ended June 30 increased to $106.31 million from $77.86 million reported a year ago, predominantly reflecting an increase in oil production volumes. Royce & Associates, founded by Chuck Royce, was the owner of 116,000 shares of Parsley Energy Inc. (NYSE:PE) at the end of June.

The CEO of Hecla Mining Jettisons Sizeable Block of Shares

The man in charge of Hecla Mining Company (NYSE:HL) also sold a sizeable block of shares this week. CEO Phillips S. Baker Jr. discarded 392,863 shares on Tuesday at $7.05 apiece, cutting his ownership to 2.66 million shares. This ownership stake includes 888,909 shares that are deferred under the Hecla Mining Company Key Employee Deferred Compensation Plan and 300,753 unvested restricted stock units.

The discoverer and producer of silver, gold, lead and zinc has seen its market value spike by an unimaginable 284% since the beginning of the year, primarily reflecting the rally in the previous metals sector. Earlier this week, JPMorgan analysts upgraded Hecla Mining Company (NYSE:HL) to ‘Overweight’ from ‘Neutral’ with a price target of $8, citing “high quality assets in increasingly attractive locations.” In late May, the company agreed to purchase Mines Management Inc. (NYSEMKT:MGN), a company engaged in the business of exploring mineral properties containing precious and base metals. Royce & Associates has 1.78 million shares of Hecla Mining Company (NYSE:HL) in its portfolio as of the end of the second quarter.

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