Enormous Cluster of Insider Selling at Brokerage and Investment Banking Firm Stifel (SF), Plus Other Noteworthy Insider Transactions

Some insider trading pundits have concluded that the best signal of future stock price appreciation is significant insider buying by one or both of the top two executives – the Chief Executive Officer and Chief Financial Officer. The approach of tracking insider buying completed by the CEO and/or CFO could have delivered strong returns over the years regardless of market conditions, and this does make perfect sense.

Corporate insiders, especially those two top-tier executives, do have a better understanding about their companies’ business operations and future prospects than any of us, so their transactions may serve as great tips for outsiders. It appears that the major reason insiders purchase shares in their own companies on the open market is that they believe those shares are severely undervalued. On the other hand, insiders can sell for any number of reasons, which is why investors pay much more attention to insider buying than insider selling. With that in mind, let’s discuss a set of noteworthy insider transactions reported with the SEC on Wednesday.

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Board Member of Office Building Landlord Buys Shares

One member of Paramount Group Inc. (NYSE:PGRE)’s Board of Directors purchased a sizable block of shares earlier this week. Board member Katharina Otto-Bernstein, a German-born filmmaker, producer and screenwriter, snapped up 100,000 shares on Tuesday at prices varying from $15.66 to $15.78 per share. Following the recent transaction, Ms. Otto-Bernstein currently owns an aggregate of 11.93 million shares.

The real estate investment trust (REIT) focused on owning and managing high-quality, Class A office properties in select central business district submarkets of New York City, Washington, D.C., and San Francisco, has seen the value of its shares drop by 13% since the start of the year. It would be safe to argue that the shares of most REITs have been predominantly driven by the monetary policy pursued by the Federal Reserve. With the Fed expected to raise rates in December after remaining “on hold” for nearly a year, the tightening monetary policy will theoretically put some downward pressure on most REITs, and Paramount Group Inc. (NYSE:PGRE) should be no exception. In mid-September, Paramount Group agreed to acquire One Front Street, a 651,000-square-foot Class A office building in San Francisco, California for $521 million. Jim Simons’ Renaissance Technologies was the owner of 1.32 million shares of Paramount Group Inc. (NYSE:PGRE) at the end of the third quarter.

On the next two pages of this article we’ll discuss the fresh insider buying and selling observed at four other companies.

Board Member of Bank of America Buys Shares Despite Numerous Analyst Downgrades

A member of Bank of America Corp (NYSE:BAC)’s Board also snapped up a block of shares this week. Board member Michael D. White, who is also an advisory partner at well-known activist hedge fund Trian Fund Management (the activist fund did not have anything to do with Mr. White’s appointment to the Board this summer), bought 25,000 shares on Monday at a price tag of $20.14 each, lifting his overall holding to 79,150 shares.

Stock market watchers are well-aware of billionaire Warren Buffet’s love affair with Bank of America Corp (NYSE:BAC), and some have been arguing that owning the shares of this bank was the biggest mistake of Mr. Buffett’s career. Nonetheless, the “Oracle of Omaha” is one of the biggest winners from the recent surge in the shares of Bank of America (Warren Buffett has the option to buy 700 million shares of the bank for $5 billion any time before September 2021 and also owns a great deal of Bank of America’s 6% cumulative perpetual preferred stock). Despite being an avid supporter of Hillary Clinton, Warren Buffett has been one of the big winners of Donald Trump’s surprising election victory as the shares of Bank of America have gained significantly over the past weeks. However, analysts such as David George of Robert W. Baird believe the shares of Bank of America have become too pricey and have advised investors to “take profits and selectively reduce exposure.” The Baird analyst recently cut his rating on the bank to ‘Neutral’ from ‘Outperform’ despite raising his price target on the stock to $18 from $17. The shares of Bank of America are 22% in the green this year. Ken Fisher’s Fisher Asset Management reported ownership of 35.75 million shares of Bank of America Corp (NYSE:BAC) in its 13F for the September quarter.

CEO-CFO Duo at Large Print and Online Publisher Buy Shares Through Public Offering

Let’s turn our attention to some insider buying conducted by the CFO-CEO duo at New Media Investment Group Inc. (NYSE:NEWM). To start with, Gregory W. Freiberg, Chief Financial and Accounting Officer, bought 10,000 shares on Wednesday at $16.00 apiece, a purchase that lifted his stake to 117,769 shares. Chief Executive Officer Michael E. Reed purchased the same amount of shares on Wednesday, boosting his holding to 175,769 shares.

Both the CEO and CFO purchased the shares through a public offering that generated gross proceeds of around $120 million, which are expected to be used for general corporate purchases that may include potential acquisitions of local media businesses and assets. Earlier this month, the man in charge of the company that owns the Columbus Dispatch purchased an additional 50,000 shares at much lower prices of $14.17-to-$14.35 per share. New Media Investment Group Inc. (NYSE:NEWM) owns, operates and invests in high-quality local-media assets, with its portfolio of assets comprising 614 publications, 527 websites, 78 mobile sites, and six yellow page directories as of the end of September. The shares of New Media are down by 19% thus far in 2016. Leon Cooperman’s Omega Advisors had 2.98 million shares of New Media Investment Group Inc. (NYSE:NEWM) in its portfolio at the end of September.

The final page of this article will digest some fresh insider selling observed at two companies.

15 Insiders at Brokerage and Investment Banking Firm Offload Shares

Let’s have a brief look at several sales observed at Stifel Financial Corp (NYSE:SF), where 15 different insiders offloaded shares this week. To begin with, Chief Executive Officer and Chairman Ronald J. Kruszewski discarded 100,000 shares on Tuesday at $50.20 apiece and offered 8,675 shares as a gift on the same day, cutting his direct ownership stake to 908,862 shares. Co-President and Chief Financial Officer James M. Zemlyak liquidated 15,000 units of common stock on the same day for $50.20 each, as well as offered 550 units as a gift. After the recent transactions, Mr. Zemlyak currently owns an aggregate of 724,183 shares. Ben A. Plotkin, Vice-Chairman of the company’s Board, sold 15,000 shares on Tuesday at a price of $50.20 per share, a sale that cut his ownership to 123,309 shares.

The massive cluster of insider selling at the full service brokerage and investment banking firm, a small portion of which was discussed above, comes shortly after the firm’s shares have surged by 31% in the past month. Stifel Financial Corp (NYSE:SF)’s earnings report for the September quarter propelled the company’s share price to a year-to-date return of 19%. Stifel, which engages in retail brokerage, securities trading, investment banking, investment advisory, and related financial services, reported net income of $16.3 million on net revenues of $642 million for the three-month period ended September 30, compared to net income of $17.2 million on net revenues of $591.6 million for the same quarter of the previous year. Ken Griffin’s Citadel Advisors owns around 192,000 shares of Stifel Financial Corp (NYSE:SF) as of September 30.

Chairman of Largest Pure-Play Children’s Specialty Apparel Retailer Sells Shares

A well-informed insider at Childrens Place Inc. (NASDAQ:PLCE) also discarded a sizable block of shares this week. Norman S. Matthews, Chairman of the Board at Childrens Place, sold 40,995 shares on Monday at prices that fell between $99.60 and $101.00 per share. After the recent sale, Mr. Matthews currently owns a stake of 49,706 shares.

The shares of the largest pure-play children’s specialty apparel retailer in North American have skyrocketed by 90% since the beginning of the year, so the insider sale mentioned above should not come as a surprise to the investment community. Childrens Place Inc. (NASDAQ:PLCE) recorded net sales of $473.8 million for the third quarter, up by 3.9% year-over-year. The company’s comparable retail sales jumped by 4.6% year-on-year in the third quarter. Childrens Place has closed 120 stores as part of a fleet optimization initiative to improve store productivity, but the company is yet to reach its goal of 200 closed stores by the end of its fiscal year 2017. Royce & Associates, founded by Chuck Royce, was the owner of 1.01 million shares of Childrens Place Inc. (NASDAQ:PLCE) at the end of the third quarter.

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