Have These 3 Companies That Registered Heavy Insider Selling Recently Hit Their “Fair” Market Value?

Although it would be unwise to claim that insider selling should always be interpreted as a bearish or pessimistic sign, this type of insider trading activity can provide some insights about how corporate insiders feel about their companies’ prospects. Retail investors employ various trading strategies and follow different investment philosophies, so there is a wide range of aspects investors consider when deciding on whether to buy, keep or sell certain companies’ shares. Examining insider trading behavior is one such primary aspect that investors need to keep tabs on, considering that insider sentiment usually serves as a reliable and accurate indicator of future stock performance.

Heavy insider selling at certain companies may suggest that insiders believe those companies have reached a fair valuation or may suggest that insiders simply anticipate softening market conditions. Nonetheless, each investor should keep in mind that insiders can sell shares for various reasons unrelated to their companies’ prospects and current performance, some of which include personal cash needs or tax payments, among others. Still, if I were investing my hard-earned money into a company’s stock, I would definitely be troubled by heavy insider selling occurring at that company. So abundant insider selling should prompt investors to carefully consider the future potential of their investment. That said, the following article will discuss fresh insider selling at three companies, as reported with the SEC on Tuesday.

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).

Two Insiders of Direct-to-Consumer Seller of Kitchen and Personal Products Sell Massive Blocks of Shares

Tupperware Brands Corporation (NYSE:TUP) has witnessed worrisome insider selling over the past several trading sessions. To begin with, Board member Angel R. Martinez discarded 10,000 shares on Monday at prices ranging from $62.20 to $62.31 per share, cutting his overall holding to 28,439 shares. More importantly, Chairman and CEO E. V. Goings offloaded 150,000 shares on Friday at prices varying from $62.23 to $62.86 per share. After the recent sale, Mr. Goings holds 54,456 shares.

The direct-to-consumer seller of kitchen and personal products has seen its shares advance by 12% so far in 2016. The massive insider selling comes shortly after Tupperware Brands Corporation (NYSE:TUP) released its financial results for its second quarter of fiscal year 2016 ended June 25. The company’s fiscal second quarter net sales were $564.7 million, down by 4% in U.S. dollar terms and up by 3% in local currency terms. Sales generated in emerging markets, which accounted for 66% of the company’s top-line, were down by 4% year-over-year in USD but up by an impressive 7% in local currency. Net sales in Indonesia, the company’s largest business unit in 2015, grew by 3% year-on-year in USD after plummeting by a disturbing 13% in the first quarter. Tupperware’s GAAP net income fell to $52.4 million from $62.0 million recorded a year earlier.

The number of asset managers followed by Insider Monkey with equity investments in Tupperware Brands increased to 21 from 18 during the first quarter of 2016, with those 21 managers holding nearly 7% of the company’s outstanding common stock at the end of March. Ray Carroll’s Breton Hill Capital upped its stake in Tupperware Brands Corporation (NYSE:TUP) by 55% during the second quarter to 15,304 shares.

The second page of this article will reveal the fresh insider selling registered at two other companies.

South Carolina-based Holding Company Registers Noteworthy Insider Selling

South State Corporation (NASDAQ:SSB) had one member of its Board sell big earlier this week. Director M. Oswald Fogle discarded 9,000 shares on Monday at a price tag of $74.93 each. Following this relatively sizable sale, Mr. Fogle currently holds an ownership stake of 24,860 shares.

In mid-June, the South Carolina-based bank holding company that provides banking services and products through its wholly-owned bank subsidiary, South State Bank, agreed to merge with Southeastern Bank Financial Corp (OTCMKTS:SBFC) to form a new bank holding company with approximately $10.5 billion in total assets, $8.7 billion in total deposits, $7.2 billion in total loans and a network of 133 branches in the Carolinas and Georgia. Under the terms of the freshly-inked deal, Southeastern shareholders will receive 0.7307 shares of South State.

Southeastern Bank Financial operates as a bank holding company of Georgia Bank & Trust Company of Augusta, the largest locally-owned and operated community bank in the Augusta metro market. The members of South State’s Board recently approved a cash dividend of $0.31 per share, $0.01 higher than the previous cash dividend and $0.06 higher than the dividend paid out a year ago. The freshly-upped dividend payment yields 1.66% annually.

There were a total of 14 hedge fund vehicles tracked by our team invested in South State Corporation at the end of the March quarter. Those 14 money managers amassed roughly 5% of the company’s outstanding shares. South State shares are up by a little less than 4% in 2016. Mark Lee’s Forest Hill Capital owned 563,287 shares of South State Corporation (NASDAQ:SSB) at the end of the first quarter.

Strong Performing Steelmaker Registers Increased Insider Selling

Nucor Corporation (NYSE:NUE) saw three different executives offload shares earlier this week, two of whom sold freshly-exercised employee stock options. Although the two executives sold more shares than the exercised stock options, we will solely look into the insider selling that did not involve options. Raymond S. Napolitan Jr., Executive Vice President of Fabricated Construction Products at Nucor since June 2013, sold 10,000 shares on Monday at a weighted average sale price of $52.39 per share. Mr. Napolitan now owns 71,170 Nucor shares.

The biggest steelmaker by output in the United States has seen the value of its stock advance by 34% since the beginning of the year. U.S. steelmakers have successfully lobbied the government for new tariffs on steel imports, after high import levels crushed prices last year. In late May, the Obama Administration imposed a 500% tariff on Chinese cold-rolled flat steel, while corrosion-resistant steel from China was set to face U.S. anti-dumping and anti-subsidy duties. Government subsidies to Chinese steel manufacturers have been blamed for causing excess capacity and putting downward pressure on prices in the steel market. According to Global Trade Information Services, steel imports fell by almost 20% this year to 14.2 million tons. Nucor Corporation (NYSE:NUE)’s net sales for the second quarter grew by 14% year-over-year to $4.25 billion, as average sales price per ton increased by 9% from the first quarter of 2016. The company’s net profits increased by 87% year-over-year to $233.8 million.

The hedge fund sentiment towards the steelmaker increased during the first quarter, as the number of funds in our database with long positions in the company rose to 29 from 20 quarter-over-quarter. Ken Fisher’s Fisher Asset Management cut its position in Nucor Corporation (NYSE:NUE) by 8% during the June quarter to 115,818 shares.

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