Insider Selling Alert at East West Bancorp Inc. (EWBC), Boston Scientific Corporation (BSX) and PPG Industries Inc. (PPG)

Most investors would agree that tracking insider trading activity should play an important role in one’s stock selection and analysis process. At the end of the day, executives and directors have more in-depth knowledge and up-to-date information on how their companies are performing and how they are likely to perform in the future. Of course, there is no corporate insider that could accurately tell you how undervalued or overvalued his or her company’s shares are, but insiders do have a better understanding of where their companies are heading. It is also commonly known that insiders sell shares for numerous reasons that may not be related to their companies’ future prospects and intrinsic value, so while not a lot of weight can be put on insider sales, this type of activity should not be overlooked by any means. Insider sales may occasionally suggest that insiders do not expect any significant positive developments at their companies in the near future. The concept of opportunity cost can easily prove that the timing of insider sales may offer some insights about the future performance of certain companies. With this in mind, the following article will discuss the insider selling activity registered at three companies so far this week.

Prior to discussing the insider trading activity, let’s make you familiar with what Insider Monkey does besides providing high-quality articles. At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read more details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning 102% and beating the market by more than 53 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks.

East West Bancorp Inc. (NASDAQ:EWBC) has witnessed two executives unload holdings this week, so let’s check out the recent insider sales of these executives. President and Chief Operating Officer Julia S. Gouw reported selling 75,000 shares on Monday at a weighted average sale price of $40.23, cutting her overall holdings to 149,115 shares. Douglas P. Krause, Secretary, Chief Risk Officer and Executive Vice President, discarded 10,000 shares on the same day at a weighted average price of $40.76 and currently holds a stake of 88,656 shares.

East West Bancorp Inc. (NASDAQ:EWBC) is the bank holding company for its wholly-owned subsidiary East West Bank, which aims to serve as the financial bridge between the United States and Greater China. The shares of East West are up by 9% for the year despite enduring a significant pullback in mid-August. The bank’s credit quality strengthened over the past several months, as its non-performing assets added up to $129.8 million as of September 30, down from $132.4 million as of December 31, 2014. East West received some attention from the hedge funds tracked by Insider Monkey during the third quarter in spite of its disappointing stock performance during the three-month period, as the number of smart money investors with stakes in the company climbed to 23 from 21 quarter-over-quarter. Jim Simons’ Renaissance Technologies added a 585,598-share stake in East West Bancorp Inc. (NASDAQ:EWBC) to its portfolio during the September quarter.

Let’s head to the next page of this insider selling article, where we reveal the insider sales witnessed at Boston Scientific Corporation (NYSE:BSX) and PPG Industries Inc. (NYSE:PPG).

A sizable insider sale was registered in the shares of Boston Scientific Corporation (NYSE:BSX) at the beginning of the current trading week. Ernest Mario, who has been a Director of Boston Scientific since October 2001, sold 125,000 shares on Monday at prices ranging from $17.55-to-$17.70, trimming his position to 86,032 shares. Earlier this month, Joseph M. Fitzgerald, Executive Vice President and President, Rhythm Management for Boston Scientific, unloaded 26,220 shares at a weighted average price of $18.58 and currently holds a direct ownership stake of 103,925 shares. On November 10, the medical-device giant announced an agreement to acquire the interventional radiology portfolio of CeloNova Biosciences, in an attempt to expand its interventional oncology business. Under the terms of the agreement, Boston Scientific is set to make an upfront payment of $70 million and make additional payments contingent on regulatory and sales milestones. Meanwhile, the shares of Boston Scientific are nearly 33% in the green year-to-date, so it is not surprising to see insiders cash out. The number of hedge funds monitored by our team with positions in the company climbed to 37 from 35 during the September quarter. Samuel Isaly’s Orbimed Advisors reported owning 24.01 million shares of Boston Scientific Corporation (NYSE:BSX) through the latest round of 13F filings.

Finally, let’s take a thorough look at the recent insider selling activity at PPG Industries Inc. (NYSE:PPG). Chairman and Chief Executive Officer Charles E. Bunch offloaded 16,286 shares on Monday at a weighted average price of $101.94, and currently owns 720,070 shares. The multinational manufacturer of paints, coatings, specialty materials, chemicals, glass, and fiberglass has seen its shares decline by 10% in 2015, mainly owing to growing concerns about the slowing global economy. PPG’s third quarter net sales decreased by roughly 2% year-over-year to $3.87 billion, primarily as a result of unfavorable foreign currency translation and lower sales volumes. Even so, the company’s management anticipates that the sales volume growth will escalate in the fourth quarter, as the global economy seems to be reviving. It appears that PPG’s stock is fairly valued at the moment, if considering its trailing price-to-earnings ratio of 24.15, which is slightly above the average of 22.70 for the comapnies in the S&P 500. PPG was very appealing to the hedge fund firms included in our database during the third quarter, as the number of smart money investors with positions in the company increased to 51 from 46 during the three-month period. Ken Griffin’s Citadel Investment Group was the largest equity holder of PPG Industries Inc. (NYSE:PPG) within our database at the end of the September quarter, holding 3.42 million shares.

Disclosure: None