Churchill Downs Inc. (CHDN) and Two Popular REITs Register High Dollar Volume of Insider Selling

Realty Income Corp (NYSE:O) is another REIT that saw noteworthy insider trading activity on the sell side last week. To begin with, Michael R. Pfeiffer, Executive Vice President, General Counsel and Secretary, sold 2,727 shares on Wednesday for $62.52 each, as well as offered 180 shares as a gift (no consideration was received). After the recent transactions, Mr. Pfeiffer currently owns 38,966 shares along with an additional 6,697 restricted stock units. Moreover, Chief Executive Officer John P. Case filed a Form 4 filing on Friday to disclose the sale of 15,000 shares on Wednesday and 8,000 shares on Thursday at a weighted average sale price of $62.53. The CEO continues to own 180,401 units of common stock.

Realty Income Corporation, also known as “the Monthly Dividend Company”, operates as a real estate company with the primary business purpose of generating monthly cash dividends by owning and managing a diversified commercial property portfolio consisting of 4,548 properties. A total of 4,467 properties were leased at the end of December 2015, which equates to an occupancy rate of 98.4%. Although Realty Income is perceived to be a very popular stock among retail investors, a mere 11 hedge funds from our system were invested in the REIT at the end of 2015. Realty Income’s shares have advanced 23% in the past 12 months and 54% in the past two years, which have pushed its current dividend yield to 3.84%. This represents one of the lowest dividend yields in the net-lease REIT space. Realty Income’s funds from operations grew by $89.5 million, or 15.9%, in 2015 to $652.4 million. Despite the sustained growth in FFO metrics, it is believed that Realty Income is slightly overvalued at the moment relative to other industry peers. For instance, W.P. Carey Inc. REIT (NYSE:WPC), another fast-growing REIT in the commercial industry, offers an annualized dividend yield of 6.31%. Nonetheless, it is also worth mentioning that Realty Income is on track to join the list of Dividend Aristocrats (a select basket of companies that have increased annual dividend payments for at least 25 consecutive years) should it keep growing its annual dividend payments through 2019. Adage Capital Management, founded by Phill Gross and Robert Atchinson, reported owning 386,200 shares of Realty Income Corp (NYSE:O) through its 13F for the December quarter.

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