Founder of Largest U.S. Homebuilder Sells Shares Amid Signs of Housing Recovery & Other Noteworthy Insider Trading

Securities transactions by corporate insiders of public corporations have received a great deal of attention from regulators, scholars and investors over the years. Assuming that insiders’ purchases and sales are somewhat reflective of the private information they posses, the public disclosures of their trades can serve as very informative signals to the investment community.

Past research shows that insiders’ securities purchases tend to outperform broader market benchmarks, which is the primary reason retail investors, hedge fund vehicles and the media keeps track of insider trading behavior. More importantly, several research papers also conclude that the overall trading behavior of corporate insiders across firms is correlated with aggregate stock returns. This means insider transactions may convey information about macro factors and economic conditions of a country or specific industry. Without further delay, let’s examine a set of insider purchases and sales reported with the U.S. SEC on Friday.

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CEO of Commercial Bank Parke Bank Boosts Ownership Stake

Let’s kick off our discussion with some mild insider buying at Parke Bancorp Inc. (NASDAQ:PKBK), where the company’s most well-informed executive piled up some shares last week. Vito S. Pantilione, who has served as the company’s President and CEO since its founding in 2005, purchased 1,000 shares on Thursday at a price of $19.65 per share. Mr. Pantilione currently owns an aggregate of 155,857 shares.

The shares of the bank holding company for commercial bank Parke Bank have gained 55% in the past year and one would normally anticipate an increase in insider selling rather than buying at the company. The CEO’s small purchase comes several days after Parke Bancorp Inc. (NASDAQ:PKBK) released its financial results for the final quarter of 2016. The bank reported net income of $17.3 million for 2016, up from $9.5 million recorded for the previous year. Another detail worth mentioning is that the bank’s total assets reached $1.0 billion on December 31, an increase of $131.1 million year-over-year. Jim Simons’ Renaissance Technologies LLC owned 17,080 shares of Parke Bancorp Inc. (NASDAQ:PKBK) at the end of the third quarter.

In the next two pages of this insider trading article, we will discuss more insider buying and selling reported on Friday.

CEO of Biopharmaceutical Company Buys Shares Amid Poor Post-Split Share Price Performance

The man in charge of Neuralstem Inc. (NASDAQ:CUR), who has shown his confidence in the company through a series of purchases in late 2016, keeps buying shares. President and CEO Richard J. Daly snapped up 2,841 shares on Wednesday at $3.52 apiece, a purchase that boosted his holding to 13,221 shares.

Although the CEO owned 134,939 shares according to his latest Form 4 filing in late 2016, the recent stock split at a ratio of 1-for-13 reduced that amount. The biopharmaceutical company focused on developing central nervous system therapies based in its proprietary neural stem cell technology completed the stock split to regain compliance with the $1.00 minimum bid price condition and fulfil all listing requirements of NASDAQ. The company’s patented technology facilitates the production of various types of central nervous system stem cells, developed for the treatment of central nervous system diseases and conditions. Since Neuralstem’s share price has performed quite poorly post-split, the CEO’s purchase may ease some worries in the market around the long-term potential of the company. Hal Mintz’s Sabby Capital had 2.79 million “old” shares (or 214,441 shares post-split) of Neuralstem Inc. (NASDAQ:CUR) at the end of the third quarter.

Mini-Cluster of Insider Buying at Small Financial Institution Farmers Capital Bank

Two influential corporate insiders at Farmers Capital Bank Corp (NASDAQ:FFKT) bought shares last week. To start with, President and CEO Lloyd C. Hillard Jr. snatched up 2,000 shares on Friday at a price of $35.13 each, lifting his overall holding to 18,311 shares. The CEO’s holding includes 8,238 shares held in an IRA. R. Terry Bennett, Independent Chairman of the Board since early May 2012, purchased 1,000 units of common stock on the same day for $35.65 each. Mr. Bennett currently owns a total of 14,643 shares following the Friday transaction.

The insider buying discussed above comes after a drop in Farmers Capital Bank Corp (NASDAQ:FFKT)’s share price in mid-January due to disappointing fourth-quarter results. In early August, the company announced plans to consolidate its four bank subsidiaries into one company, with the merged bank said to be named United Bank & Capital Trust Company. While the merger was originally expected to be completed in January 2017, the consolidation is now expected to close on February 20. Should President Donald Trump push for regulatory reforms to spur additional economic growth and subsequently have Dodd-Frank, which was signed into law in July 2010 to help avoiding a financial crisis like the one experienced in 2008, under microscope, Farmers Capital Bank Corp and its soon-to-be-merged subsidiaries could benefit from decreased regulation, higher economic growth and rising interest rates. Renaissance Technologies LLC reported ownership of 256,500 shares of Farmers Capital Bank Corp (NASDAQ:FFKT) in its 13F filing for the September quarter.

The final page of this article will focus on discussing some massive insider selling witnessed at two other companies.

Founder of Largest U.S. Homebuilder Sells Massive Amount of Shares Amid Signs of Housing Recovery

Let’s shift our focus toward the insider selling at D.R. Horton Inc. (NYSE:DHI), where one well-informed insider offloaded a massive amount of shares last week. Founder and Chairman Donald R. Horton sold 772,252 shares on Friday, 1.07 million shares on Thursday and 162,290 shares on Wednesday at prices ranging from $30.83 to $31.90 per share. After this series of sales, Mr. Horton currently owns an aggregate of 23.01 million shares.

The largest homebuilder in the United States has seen the value of its shares advance by 12% in the past year, partially reflecting strong gains after releasing better-than-expected financial results for its first fiscal quarter earlier this month. D.R. Horton Inc. (NYSE:DHI)’s new orders in the three months that ended December 31 increased by 14% year-on-year to 9,241 homes, above analysts’ estimates of 8,717. This serves as the latest indication of the housing market’s recovery. In another sign of the housing recovery, the home builder was recently upgraded by Moody’s Investors Service, regaining investment grade status and getting rid of the so-called “fallen angel” status. Edgar Wachenheim’s Greenhaven Associates increased its position in D.R. Horton Inc. (NYSE:DHI) by 10% during the fourth quarter to 7.40 million shares.

Massive Cluster of Insider Selling at Webster Financial

Numerous insiders at Webster Financial Corporation (NYSE:WBS) offloaded shares last week, some of whom mostly sold freshly-exercised stock options. To start with, Chairman and CEO James C. Smith offloaded 100,284 shares on Wednesday at prices that fell between $54.27 and $54.62 per share, cutting his direct ownership stake to 262,841 shares. Executive Vice Chairman Joseph J. Savage sold 8,000 shares on Thursday at $54.46 apiece, all of which were held indirectly via his 401(k) plan. Board member Mark Pettie unloaded 1,912 shares on Thursday and 2,841 shares on Wednesday at prices varying from $54.56 to $54.91 per share. Mr. Pettie owns a total of 21,177 shares following the two sales. These transactions were the only insider sales that did not involve freshly-exercised stock options.

The shares of the bank holding company and financial holding company have jumped 63% in the past one year, which possibly explains the surge in insider selling. Specifically, the increase in insider selling comes after Webster Financial Corporation (NYSE:WBS) released its financial results for the fourth quarter of 2016, a year the management described as “its best year ever.” The company registered its 29^th consecutive quarter of year-over-year revenue growth and its 18^th consecutive quarter of double-digit year-on-year commercial loan growth. Ken Fisher’s Fisher Asset Management has also started cashing out portions of its stake in Webster Financial Corporation (NYSE:WBS), as the asset manager cut its stake in the company by 4% during the fourth quarter to 2.46 million shares.

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