The rally in U.S. equities continues on Tuesday, with the Dow Jones Industrial Average briefly exceeding its all-time intra-day high of 18,351.36. The blue-chip index’s all-time closing high is 18,312.39, reached in May 2015. Hence, it should not be surprising if the insider selling activity will gain steam in the upcoming weeks, whereas insider buying will slow down for a period.
In fact, the insider buying activity has been virtually non-existent in the past several trading sessions. As Insider Monkey attempts to share only information-rich insider trading activity with readers, our team focuses on the spur-of-the-moment insider trading activity only. This essentially means we are ignoring insider buying and selling conducted under pre-arranged trading plans or any activity related to freshly-exercised options. By stripping away routine and uninformative insider transactions, Insider Monkey reduces the likelihood of wrongly interpreting insider trading metrics. Having this in mind, the following article will lay out a list of five U.S. publicly trading companies that registered noteworthy insider trading activity as of late.
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).
Operator of Restaurant Chain Olive Garden Registers Insider Buying amid Stock Price Weakness
Darden Restaurants Inc. (NYSE:DRI) recently registered the first insider buying of 2016, so let’s find out who stands behind the fresh insider activity. Board member James P. Fogarty snatched up 3,000 shares on Thursday at $61.70 apiece, lifting his overall holding to 7,890 shares.
The recent insider buying comes shortly after the operator of restaurant chains Olive Garden, LongHorn Steakhouse, among others released its financial results for the fourth quarter and fiscal year that ended May 29, as well as issued a disappointing outlook for the upcoming year. Florida-based Darden Restaurants Inc. (NYSE:DRI) anticipates earnings per share in the range of $3.80-to-$3.90 in fiscal 2017, below analysts’ expectations of $3.99 per share. The company’s boardroom approved an increase in its quarterly dividend to $0.56 per share from its previous quarterly dividend of $0.50. The freshly-increased dividend yields 3.58% annually. Olive Garden and other sit-down restaurants have been feeling the strong competition from fast-food peers, as consumers continue to look for value. Darden’s shares are down a little less than 2% since the beginning of 2016. Jeffrey Smith’s Starboard Value LP was the owner of 6.62 million shares of Darden Restaurants Inc. (NYSE:DRI) at the end of March.
The next two pages of this article will discuss the recent insider selling registered at four publicly traded companies.