Darden Restaurants Inc. (DRI) Registers Insider Buying, Cluster of Selling at Costco and 3 Other Companies with Insider Selling

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.

Wholesale Club Giant Registers Cluster of Insider Selling Near 52-Week High

Costco Wholesale Corporation (NASDAQ:COST) registered a cluster of insider selling earlier this week involving three different executives. To start with, Douglas W. Schutt, who stepped down as Executive Vice President in late May, discarded 14,656 shares on Monday at prices varying from $166.73 to $166.88 per share, cutting his overall holding to 40,184 shares. John D. McKay, Executive Vice President and Chief Operating Officer of Northern Division and Midwest Region, sold 7,500 shares on the same day at prices that fell between $166.54 and $166.65 per share, after which Mr. McKay continues to own 58,535 shares. Executive Vice President and Chief Financial Officer Richard A. Galanti unloaded 2,400 units of common stock on Monday at a price tag of $167.08 each, cutting his ownership to 27,636 units.

Just recently, Oppenheimer analysts reiterated their “Outperform” rating on the largest warehouse retail club company and maintained their price target at $175, saying that Costco “is one of the world’s best positioned and most powerful retail chains”. Costco Wholesale Corporation (NASDAQ:COST)’s shares rose after the company posted better-than-anticipated same-store sales for June. Costco shares are trading slightly below their 52-week high of $169.73 reached in December 2015, after they have gained 3% thus far in 2016. Warren Buffett’s Berkshire Hathaway owned 4.33 million shares of Costco Wholesale Corporation (NASDAQ:COST) on March 31.

This MLP Registers Some Insider Selling

Western Gas Partners LP (NYSE:WES) has witnessed increased insider selling in the past several trading sessions. James R. Crane, who has served as a director of the general partner of Western Gas Partners since April 2008, discarded 12,219 common units on Friday and 24,696 units on Monday at prices ranging from $50.00 to $50.70 per share.

The growth-oriented Delaware master limited partnership formed by Anadarko Petroleum Corporation (NYSE:APC) in 2007 to acquire, own, develop and operate midstream energy assets has seen its market value gain 6% since the start 2016. Western Gas Partners LP (NYSE:WES) paid shareholders a distribution of $0.815 per unit for the first quarter, which was 2% higher than the distribution paid for the first quarter of 2016 and 12% higher than the distribution paid for the first quarter of 2015. The increased quarterly distribution equates to an annual dividend yield of 6.48%. Jim Simons’ Renaissance Technologies owns 269,100 units of Western Gas Partners LP (NYSE:WES) as of the end of the first quarter.

Manufacturer of Agricultural and Industrial Machinery Has More Insiders Unload Shares

Alamo Group Inc. (NYSE:ALG) has seen three different executives offload shares so far in July, so let’s have a look at the most recent insider selling. Geoffrey Davies, Vice President and Managing Director of Alamo Group Europe Ltd, sold 5,000 shares on Friday at a price tag of $65.87 each, cutting his ownership to 17,500 shares.

The market leader in agricultural and industrial machinery has seen its market capitalization jump by 24% since the start of 2016. The company’s net sales for the first quarter of 2016 increased by 1.5% year-on-year to $210.97 million, mainly due to improved sales of its industrial products. Meanwhile, Alamo Group Inc. (NYSE:ALG)’s bottom line spiked by 17.7% year-over-year to $8.66 million, reflecting improved sales in the company’s industrial division, as well as continued improvement in efficiencies and lower material costs. James A. Star’s Longview Asset Management reported owning 1.70 million shares of Alamo Group Inc. (NYSE:ALG) in its 13F for the March quarter.

Used-Car Dealer Registers Insider Selling Amid Slowing Top-Line Growth

CarMax Inc. (NYSE:KMX) has seen two insiders jettison shares in the past several trading sessions, one of whom sold freshly-exercised stock options. Eric M. Margolin, Executive Vice President, General Counsel and Corporate Secretary, sold 2,000 shares on Monday for $52.95 each, cutting his stake to 32,303 shares. Mr. Margolin sold an additional 2,000 shares on Thursday at $50.75 apiece.

The shares of the well-known used-car dealer are up 1% so far in 2016. CarMax Inc. (NYSE:KMX) has been facing slowing growth in sales due to temporary weakness in used-car pricing, as lower gas prices and a constantly tightening jobs markets led to higher sales of new cars. In late June, the company reported net sales and operating revenues of $4.13 billion for its first quarter that ended March 31, up 2.8% year-on-year. CarMax’s comparable unit sales at is used-car stores increased a mere 0.2% year-over-year. Charles Akre’s Akre Capital Management was the owner of 4.32 million shares of CarMax Inc. (NYSE:KMX) at the end of the first quarter.

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