Cluster of Insider Selling at Overseas Seller of Marlboro Cigarettes, Plus Other Eye-Catching Insider Buying and Selling

A common fallacy among inexperienced and uninformed investors is that all insider trading is illegal. Nothing could be further from the truth: corporate insiders can buy and sell shares of their companies legally as long as they play by the rules imposed by the U.S. Securities and Exchange Commission and do not trade on material non-public information. Numerous research studies focused on estimating the returns earned by corporate insiders conclude that insider purchases earn abnormal returns of more than 6% per year. The actual percentage amount is irrelevant, but this piece of information shows insiders’ moves are worth monitoring.

A few people would disagree that information is very valuable commodity. Corporate insiders usually have a great deal of information; a lot more up-to-date and useful information than the second-hand information possessed by outsiders such as journalists, hedge fund managers and Wall Street analysts. Moreover, it’s not just the knowledge that makes corporate insiders so successful at trading their company’s shares. Their contrarian approach to investing combined with the superior knowledge about their companies, enable corporate insiders to earn good trading profits. With that in mind, let’s have a look at a set of noteworthy insider transactions reported with the SEC on Wednesday.

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Board Member at Provider of Privacy Protection Services Buys 200k Shares

Let’s kick off our discussion by looking at a massive insider purchase at Intersections Inc. (NASDAQ:INTX). David A. McGough, a director since August 1999, bought 200,000 shares on Friday at $3.40 apiece, boosting his ownership stake to 707,250 shares.

The provider of identity risk management and privacy protection services for consumers has seen its market capitalization rise by 56% in the past 12 months. Intersections Inc. (NASDAQ:INTX)’s shares surged in early December, when the company’s Board of Directors announced a decision to close the Pet Health Monitoring business. This business segment used to provide health and wellness monitoring products and services for veterinarians and pet owners. Since the Pet Health monitoring segment was not generating sufficient revenue to cover operating expenses, the Board’s decision meant the company would not burn cash to sustain an unpromising business. Earlier this week, Intersections announced it had sold the membership interest in wholly-owned subsidiary Captira Analytical LLC in an attempt to focus on identity and privacy protection. Captira Analytical offers automated solutions to the bail bonds industry. John H. Lewis’ Osmium Partners reported owning 3.46 million shares of Intersections Inc. (NASDAQ:INTX) in its 13F filing for the fourth quarter.

On the second page of this insider trading article, we discuss fresh insider buying at two other companies.

Newly-Appointed CEO of Insurance Holding Company Buys New Stake

The man in charge of Cna Financial Corp (NYSE:CNA) initiated a stake in the company at the beginning of the week. Dino E. Robusto, who became Chairman and Chief Executive Officer of Cna Financial in December last year, bought a 12,000-share stake on Tuesday at prices between $41.64 and $41.93 per share. Although the purchase might have been made to meet the company’s stock ownership guidelines, it still represents a positive sign.

The insurance holding company, which runs property and casualty and remaining life and group insurance operations, has seen the value of its shares advance by 49% in the past year. Diversified holding company Loews Corporation (NYSE:L) owned roughly 90% of Cna Financial Corp (NYSE:CNA)’s outstanding common stock at year-end. The commercial property and casualty insurance firm recently reported net income of $859 million for full-year 2016, up from $479 million reported for the prior year. More importantly, the company announced a regular dividend of $0.25 per share, as well as another $2-per-share special dividend. As a result, Cna Financial returned nearly all earnings in dividends. Jim Simons’ Renaissance Technologies LLC owned 757,700 shares of Cna Financial Corp (NYSE:CNA) at the end of December.

New CEO of Surgical Implant Company Purchases Shares

Our insider trading database shows the insider buying activity at RTI Surgical Inc. (NASDAQ:RTIX) had been non-existent since December 2013 until last week. Camille Farhat, who has been named Chief Executive Officer effective mid-March, snapped up 83,000 shares on Friday at a price tag of $3.44 each, boosting his ownership to 1.08 million shares. Mr. Farhat’s ownership stake includes 1 million shares of restricted stock.

The shares of the surgical implant company providing surgeons with safe biologic, metal and synthetic implants are 6% in the green year-to-date. RTI Surgical Inc. (NASDAQ:RTIX)’s total revenues for the nine months that ended September decreased by $4.7 million year-over-year to $201.5 million, reflecting lower commercial revenue. It worth mentioning though that a significant amount of the company’s revenue is derived from large global commercial stocking distributors, whose timing of orders can vary from quarter to quarter. These ordering patterns lead to significant unit volume variations. There were 11 hedge funds followed by our team invested in the surgical implant company at the end of December, amassing 16% of the company’s outstanding shares. Royce & Associates, founded by Chuck Royce, had around 777,000 shares of RTI Surgical Inc. (NASDAQ:RTIX) in its portfolio at year-end.

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

Cluster of Selling at the Seller of Marlboro Overseas

Three well-informed and influential insiders at Philip Morris International Inc. (NYSE:PM) offloaded shares last week. To start with, Chairman Louis C. Camilleri, former CEO of PMI, sold 60,000 shares on Friday at prices varying from $103.23 to $103.43 per share, cutting his ownership to 753,806 shares. Marc S. Firestone, Senior Vice President and General Counsel, unloaded 17,088 shares last Wednesday at an average price of $102.40 per share, along with an additional 2,448 shares that appear to have served as payment of tax liability. Mr. Firestone currently owns an aggregate of 177,643 shares following these transactions. Chief Executive Officer Andre Calantzopoulos offloaded 35,000 shares on the same day at an average price of $102.65 per share, as well as liquidated 3,753 shares presumably for payment of tax liability. The head of the cigarette maker currently owns a total of 752,671 shares.

The shares of the seller of Marlboro and other brands overseas have gained 14% thus far in 2017, so the spike in insider selling isn’t necessarily surprising. Philip Morris International Inc. (NYSE:PM) recently reported net revenues (excluding excise taxes) of $7.0 billion for the fourth quarter, up 9.1% year-over-year. The cigarette maker reported total cigarette shipment volume of 200.6 billion units, down 4.4% year-on-year due to weakness in Europe. Philip Morris International appears to be betting on a smoke-free future, with the management being exited over the enormous promise of so-called reduced-risk products such as heat-not-burn products like HeatSticks. Andy Brown’s Cedar Rock Capital owned 11.95 million shares of Philip Morris International Inc. (NYSE:PM) heading into 2017.

Executives at Manufacturer of Non-Alcoholic Beverages Trim Equity Stakes

One member of Dr Pepper Snapple Group Inc. (NYSE:DPS)’s executive team offloaded a sizeable block of shares at the beginning of the week. James “Jim” Johnston, President of Beverage Concentrates and Latin America Beverages for Dr Pepper Snapple Group, liquidated 33,314 shares on Tuesday at prices ranging from $94.53 to $94.73 per share. Mr. Johnston currently owns a mere 7,861 shares after the Tuesday sale. A number of insiders offloaded shares during the course of the previous week as well.

The shares of the integrated brand owner, manufacturer and distributor of non-alcoholic beverages are up a little less than 2% in the past 12 months. The sale discussed above comes after Dr Pepper Snapple Group Inc. (NYSE:DPS) released disappointing results for the quarter that ended December. The company’s fourth-quarter net income fell to $165 million from $185 million reported in the same period of the previous year, reflecting a loss on the early extinguishment of certain debt and weakness of the Mexican peso. The management warned that the recent events affecting Mexico “have created an uncertain economic and consumer environment,” which could further impact the company’s bottom-line figure this year. Dr Pepper Snapple Group generated net sales of $6.44 billion during the entire 2016, up 3% relative to 2015 net sales. Ken Griffin’s Citadel Advisors LLC had around 538,000 shares of Dr Pepper Snapple Group Inc. (NYSE:DPS) in its equity portfolio at the end of the fourth quarter.

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