Cheniere Energy Inc. (LNG) and Vince Holding Corp (VNCE) See Their CEOs Buy Shares; Three Other Companies Register Insider Selling

While there is no way to either deny or confirm the following statement, there is good reason to believe that hedge fund vehicles usually do not pay too much attention to insider trading behavior. Most hedge fund analysts design financial models, analyze financial statements, read sell-side equity research, as well as discuss with management teams of publicly-traded companies. They have access to much more information than insider trading behavior could possibly offer, so they may be avoiding examining insider trading data.

However, smaller-scale retail investors may not have the luxury of reading sell-side equity research or holding private meetings with the management teams of certain companies, so they definitely need to incorporate insider trading metrics in their stock selection and analysis process. Actions speak louder than words, so the investment community needs to pay close attention to insiders’ transactions and moves. Corporate insiders buy shares in their own companies on the open market mostly because they believe those shares are undervalued and no words could replicate the same message as precise as insider buying. Having this in mind, let’s have a look at several notable insider transactions recorded with the SEC on Thursday.

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).

U.S. Exporter of LNG Has Freshly-Appointed CEO Buy Shares

Cheniere Energy Inc. (NYSEMKT:LNG) saw its freshly-appointed Chief Executive Officer and President buy shares earlier this week. Jack A. Fusco purchased one block of 14,116 shares and another of $14,115 shares on Wednesday at prices varying from $32.90 to $33.01 per share, with the latter block being held through Fusco Energy Investments LLP that currently holds 36,496 shares. After the recent purchases, Mr. Fusco currently holds a direct ownership stake of 272,878 shares. Just recently, well-known short seller Jim Chanos, founder of Kynikos Associates, presented his short thesis for the U.S. exporter of liquefied natural gas (LNG) at the SALT conference in Las Vegas, calling the company “financial engineering gone crazy”. However, analysts at Citigroup, who have a ‘Buy’ rating on Cheniere Energy Inc. (NYSEMKT:LNG) and a price target of $47, believe there are two primary catalysts for the company over the forthcoming 18 months. One of the two catalysts is the fresh appointment of Mr. Fusco as CEO, while the second one involves the company’s contracts to sell 84 LNG cargoes through 2018, which could be worth $1.0 billion in gross revenue. Shares of Cheniere are down 11% year-to-date. Carl Icahn’s Icahn Capital LP owned 32.68 million shares of Cheniere Energy Inc. (NYSEMKT:LNG) at the end of March.

Contemporary Clothing Company Has CEO Buy Shares

The man in charge of Vince Holding Corp (NYSE:VNCE) recently made the first acquisition of Vince shares.  Brendan L. Hoffman, CEO since October 2015, purchased a new stake of 30,000 shares on Tuesday at $5.28 apiece. The purchase comes shortly after the contemporary clothing company released its financial results for the first quarter of fiscal 2016 that ended April 30. Vince Holding Corp (NYSE:VNCE) reported net sales of $67.65 million for the three months that ended April 30, up from $59.84 million posted for the same period of the prior year. However, the company’s comparable sales including e-commerce plunged a disturbing 12.3% year-over-year, reflecting a decline in the number of transactions and average order value as a result of a planned reduction in promotional activity and inventory levels. The decrease in gross margin to 41.8% from a much higher margin of 51.4% recorded last year, as well as an increase of 24.0% in selling, general and administrative expenses, impacted significantly the company’s bottom line. Vince shares are 11% in the green thus far in 2016. Joel Ramin’s 12 West Capital Management added an 847,436-share stake in Vince Holding Corp (NYSE:VNCE) during the first quarter of 2016.

Truckload Carrier Has Board Member Sell Big This Week

Larry J. Gordon, member of Heartland Express Inc. (NASDAQ:HTLD)’s board, discarded 50,000 shares on Tuesday and 45,934 shares on Wednesday at prices that ranged from $17.54 to $17.93 per share. After the recent sales, Mr. Gordon continues to own 476,933 shares. The short-to-medium haul truckload carrier of commodities has seen its market value gain 4% since the beginning of 2016. In early May, analysts at Wells Fargo downgraded Heartland Express Inc. (NASDAQ:HTLD) to ‘Underperform’ from ‘Market Perform’, while analysts at investment firm KeyBanc Capital Markets downgraded the stock to ‘Sector Weight’ from ‘Overweight’. KeyBanc analysts’ downgrade reflects softer pricing dynamics and relative valuation, but the transportation and logistics company is said to have limited downside due to favorable free-cash-flow generation and healthy balance sheet. Shares of Heartland Express are currently changing hands at around 20.4-expected earnings, above the forward P/E of 16.8 for the S&P 500 Index. Ken Fisher’s Fisher Asset Management has 2.25 million shares of Heartland Express Inc. (NASDAQ:HTLD) in its portfolio as of March 31.

Global Biopharma Firm Has Executive Offload Shares

Bristol-Myers Squibb Co (NYSE:BMY), a company with no insider trading activity on the buy side in recent years, has seen increased insider selling in recent months. John E. Elicker, Senior Vice President of Public Affairs and Investor Relations, sold 11,820 shares on Tuesday at prices that fell between $72.64 and $72.74 per share, cutting his overall holding to 55,010 shares. The global biopharma firm has seen its shares advance by 4% since the beginning of 2016. Credit Suisse analysts, who are excited over the high potential of the immuno-oncology market, consider Bristol-Myers Squibb Co (NYSE:BMY) a leader in I-O. The highly-diversified drug marker currently provides an annual dividend yield of 2.12% or an annual dividend of $1.52 per share. Moreover, the company has provided shareholders with a dividend for more than 300 consecutive quarters and has increased its annual dividend payment since 2009. Ken Griffin’s Citadel Advisors LLC was the owner of 5.02 million shares of Bristol-Myers Squibb Co (NYSE:BMY) at the end of the first quarter.

High-Flying Energy Solutions Provider Registers Insider Selling

Hans Peter Michelet, member of Energy Recovery Inc. (NASDAQ:ERII)’s Board of Directors since August 1995, discarded two blocks of 75,000 shares each on Tuesday and Wednesday at a weighted average price of $9.14 per share. After the recent sales, Mr. Michelet currently owns 150,000 shares. The energy solutions provider to industrial fluid flow markets had been trading below or around $3 a share for quite some time until October 2015, when the California-based company won a 15-year contract from oilfield company Schlumberger Limited (NYSE:SLB) for its VorTeq hydraulic pumping system. The $125 million-deal gave Energy Recovery the exclusive rights to provide hydraulic pumping systems to the oilfield services behemoth. Energy Recovery shares are up an impressive 243% in the past 12 months and gained 26% in 2016 alone. Under the aforementioned deal, Energy Recovery received an immediate payment of $75.00 million, with the remaining money coming in two equal payments of $25.00 million subject to achieving two milestones. Jim Simons’ Renaissance Technologies owns 141,800 shares of Energy Recovery Inc. (NASDAQ:ERII) as of March 31.

Disclosure: None