Insider Buying at Baker Hughes, Pure-Play SNF REIT, and Car Rental Giant Hertz Global, Plus Insider Selling at 2 Companies

Investors use various trading strategies and follow different investment philosophies, so they tend to look at a wide range of aspects when deciding whether to buy, keep or sell a certain company’s shares. Insider trading behavior is one aspect investors can analyze as part of their stock analysis process, as insider sentiment usually serves as an accurate indicator of future stock performance.

Corporate insiders have a preponderance to follow the pattern of buying low and selling high, and this contrarian approach to investing, coupled with access to superior information, has allowed insiders to beat stock market gauges over the years. Heavy insider selling at certain companies might suggest that insiders believe those companies have reached a fair valuation, or might convey expectations of softening market conditions. Nonetheless, investors should keep in mind that insiders tend to sell shares for various reasons, including personal cash needs, tax payments, and others. That being said, let’s proceed to our brief discussion of several noteworthy insider transactions reported with the SEC on Wednesday.

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Board Member at Well-Known Oilfield Services Provider Buys Shares After Merger Announcement

One member of Baker Hughes Incorporated (NYSE:BHI)’s boardroom filed Wednesday to disclose the purchase of a sizeable block of shares. Gregory Dean Brenneman, who has been serving on the company’s Board of Directors since early June 2014, bought 85,000 shares on Monday at prices varying from $58.66 to $59.12 per share. After the recent purchase, Mr. Brenneman currently owns a total of 89,425 shares.

The insider purchase comes shortly after General Electric Company (NYSE:GE) announced in late October that it would merge its oil and gas business with Baker Hughes Incorporated (NYSE:BHI), creating the world’s second-largest oilfield services provider. The freshly-announced deal represents a clear sign that consolidation in the energy sector is picking up, as companies are likely to endure long-term lower oil prices. In addition to being able to achieve significant cost synergies, analysts argue that the “new Baker Hughes” will be able to reach revenue synergies as well. According to analysts at Guggenheim Securities, “if GE is able to go beyond the cost savings and related benefits of scale, and leverage its technology with Baker Hughes – particularly in the areas of materials, diagnostics, and analytics – labor productivity and capital-efficiency metrics would not only improve, but new services and business models could be created.” The shares of Baker Hughes have gained 32% since the beginning of the year. Ken Griffin’s Citadel Advisors LLC reported owning 3.86 million shares of Baker Hughes Incorporated (NYSE:BHI) through the round of 13Fs for the third quarter.

Let’s head to the next two pages of this article, where we will discuss more insider transactions reported with the SEC on Wednesday.

Board Members at Pure-Play SNF REIT Pile Up Shares

Two members of Care Capital Properties Inc. (NYSE:CCP)’s Board of Directors purchased some shares earlier this week. Douglas Crocker II, Chairman of the company’s Board, snapped up 20,000 shares on Monday at prices that fell between $23.40 and $23.41 per share, a purchase that lifted his ownership stake to 78,290 shares. John L. Workman, yet another member of CCP’s boardroom, bought a 10,000-share block on Tuesday at a weighted average price of $23.76 per share. After the recent purchase, Mr. Workman currently holds an aggregate of 22,466 shares.

Care Capital Properties Inc. (NYSE:CCP) operates as a self-managed REIT with a diversified portfolio of skilled nursing facilities and other healthcare assets operated by private regional and local care providers. As the Federal Reserve has done its best to warn us that we are entering a period of tightening monetary policy, income-paying REITs will likely lose some of their attractiveness in the near term. At the end of September, Care Capital Properties paid a cash dividend of $0.57 per share, which yields an attractive annual yield of 9.71%. The shares of CCP are 23% in the red this year. Israel Englander’s Millennium Management was the owner of around 568,000 shares of Care Capital Properties Inc. (NYSE:CCP) at the end of September.

Executives at Battered Car Rental Giant Buys Shares amid Share Price Weakness

Some members of Hertz Global Holdings Inc. (NYSE:HTZ)’s executive team feel the company’s shares represent an attractive buy at the moment. Thomas C. Kennedy, Chief Financial Officer and Senior Executive Vice President, snatched up 10,000 shares on Monday at prices varying from $28.00 to $28.11 per share. Mr. Kennedy currently holds an ownership stake of 31,200 shares following the recent purchase. Tyler A. Best, Chief Information Officer and Executive Vice President, bought 14,320 shares last Friday at a price of $27.93 per share, nearly doubling his holding to 28,810 shares.

In late June, former Hertz Global Holdings completed the separation of its car rental business and equipment rental business into two separate companies. Hertz Global Holdings Inc. (NYSE:HTZ), which operates the rental-car business, has seen its market capitalization decline by a disturbing 46% in the past three months. The car rental giant, whose business operations involve renting and leasing vehicles through the Hertz, Dollar, and Thrifty brands, has been struggling to satisfy investors with its bottom-line performance due to depreciation on vehicles and slower-than-anticipated cost savings. Some analysts believe that the deterioration in demand and mis-execution on the part of the management also explain Hertz’s recent poor performance. Activist investor Carl Icahn boosted his ownership stake in Hertz Global Holdings Inc. (NYSE:HTZ) by 8.63 million shares during the third quarter to 12.94 million shares.

The final page of this article will discuss fresh insider selling observed at two other companies.

CEO of Linear Technology Discards Voluminous Amount of Shares

The man in charge of Linear Technology Corporation (NASDAQ:LLTC) discarded a great deal of shares this week, a sale that could be worth the attention of the investment community. Chief Executive Officer Lothar Maier liquidated 274,642 shares on Tuesday at prices ranging from $60.95 to $61.00 per share, cutting his holding to 215,652 shares.

When having a closer look at the company and its recent insider selling, this insider sale does not seem surprising after all. In late July, Analog Devices Inc. (NASDAQ:ADI) agreed to buy fellow chipmaker Linear Technology for a total consideration of approximately $14.8 billion. Hence, there aren’t any particular reasons Linear Technology’s CEO would want to hold onto his ownership stake any more. Under the terms of the agreement inked this summer, Linear Technology Corporation (NASDAQ:LLTC) shareholders are set to receive $46.00 per share in cash and 0.2321 shares of Analog Devices should the deal go through. Linear Technology had been viewed as one of the most attractive acquisition targets in the semiconductor industry even before the acquisition announcement, considering its high margins and engineering talent. Jim Simons’ Renaissance Technologies LLC was the owner of 8.71 million shares of Linear Technology Corporation (NASDAQ:LLTC) at the end of September.

Insiders at Rockwell Automation Sell Shares Near 52-Week High

Several insiders Rockwell Automation (NYSE:ROK) also discarded some shares earlier this week. Keith D. Nosbusch, who stepped down as Rockwell Automation President and CEO earlier this year, sold 40,000 shares on Monday and 10,000 shares on Wednesday at prices that ranged from $132.00 to $133.37 per share. After the recent sales, Mr. Nosbusch currently holds a direct ownership stake of 379,896 shares. Moreover, John P. McDermott, Senior Vice President of Global Sales and Marketing, offloaded 11,117 shares on Monday at a price of $132.65 per share, as well as offered 2,249 shares as a gift. Following these transactions, Mr. McDermott owns an aggregate of 36,887 shares.

The shares of the self-proclaimed leader in industrial automation and information are trading near their 52-week high of slightly below $134 per share, which does explain the aforementioned insider selling to some extent. Rockwell Automation (NYSE:ROK), which makes factory automation systems, anticipates the first full-year increase in sales in three years, reflecting stabilizing demand in industries such as oil and gas that helped the company report better-than-expected revenue and earnings for the quarter that ended September 30. Rockwell Automation anticipates sales growth in the range of 1%-to-5% for its current fiscal year ending September 2017, with organic growth expected to fall in the range of 0%-to-4%. The shares of Rockwell Automation are up around 30% year-to-date. Cliff Asness’ AQR Capital Management added a 404,873-share stake in Rockwell Automation (NYSE:ROK) to its portfolio during the September quarter.

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