Last week’s dollar value of insider selling fell by 60% week-over-week, which might seem like great news for the investment community. With the United Kingdom’s highly-scrutinized referendum held last Thursday, one might have anticipated insider selling to skyrocket ahead of this extremely important event. But that did not happen. Surprisingly, Britons decided to leave the European Union, a decision that added a lot of uncertainty in financial markets (as if there wasn’t enough uncertainty already).
While there is no doubt that insider buying usually conveys positive information, the interpretation of insider selling is much more complicated. Corporate insiders, namely Board members and executives, sell shares in their own companies for a wide range of reasons, most of which do not have anything to do with their companies’ current developments or future prospects. However, this does not necessarily mean that insiders are selling shares randomly; they usually sell high and buy low. It is their contrarian approach to investing which led past studies suggest that corporate insiders are quite good at trading securities. With that in mind, the following article will lay out a list of three companies that had their insiders report equity sales with the SEC on Friday, when global markets crushed following Britons’ decision to leave the European Union.
Through extensive research, we have determined that the due diligence that the investors in our database employ, as well as their long-term focus makes them perfect targets to emulate. However, the results of our analysis have also shown that the small-cap picks of these funds can generate much better returns, with the 15 most popular small-cap stocks beating the market by an average of 95 basis points per month (read more details here).
High-Flying REIT Registers Increased Insider Selling
Duke Realty Corp (NYSE:DRE) has seen two executives sell big this June, so let’s have a look at the most recent activity. Steven R. Kennedy, Executive Vice President of Construction, reported selling 26,649 shares on Thursday at $25.41 apiece, all of which were held by the Steven R. Kennedy Revocable Trust that continues to own 5,300 shares. Mr. Kennedy also holds a direct ownership stake of 42,691 shares. Earlier this month, Executive Chairman Dennis D. Oklak sold 75,000 shares for $24.41 each, cutting his stake to 305,444 shares.
The real estate investment trust owing or jointly controlling 538 industrial and medical office properties has seen its market value jump by 20% since the beginning of 2016, so it may be a good idea for Duke Realty’s insiders to diversify given the high uncertainty in financial markets at the moment. Duke Realty Corp (NYSE:DRE)’s funds from operations (FFO) for the first quarter of 2016 were $92.09 million, down from $114.37 million recorded a year ago. The REIT’s decision to use the proceeds from dispositions conducted in 2015 to reduce leverage and re-invest in developing properties impacted the FFO figure.
The REIT currently pays out a quarterly distribution of $0.18 per share, which yields 2.84% annually. The hedge fund sentiment towards Duke Realty increased during the first quarter of 2016, as the number of funds from our system with stakes in the REIT spiked to 12 from nine quarter-over-quarter. Ken Griffin’s Citadel Advisors LLC was the owner of nearly 195,000 shares of Duke Realty Corp (NYSE:DRE) at the end of March.
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The second page of this article will discuss the insider selling registered at two other companies.