In this article, we will take a detailed look at Insiders are Selling These 10 Stocks in 2024. For a quick overview of such stocks, read our article Insiders are Selling These 5 Stocks in 2024.
Investors are on tenterhooks as the Fed meets this week to decide its future plan of action to tackle inflation, which remains sticky. Overall, the market seems not much worried about the inflation problem as investors are pumping money into equities despite deafening recession warnings from the bears. Bank of America’s Michael Hartnett recently said in a note that US equity funds saw inflows worth $56 billion in the week ending March 13.
While Hartnett said the labor market is finally starting to “crack,” some sections of the market are coming to terms with the possibility of a higher for longer scenario, since consumer spending is still high and the market is not showing signs a slowdown that was expected when rate hikes started
“We thought we had two feet on the brakes, but maybe we in fact only have one foot on the brakes, and that’s why we haven’t seen as much of a reduction in demand,” Minneapolis Fed President Neel Kashkari said, according to a Wall Street Journal report that discussed in detail how the housing market in the US remains resilient despite rate hikes.
Barclays in a latest note tried to explain why exactly the markets keep rallying despite rising inflation and recession worries.
Barclays strategists led by Emmanuel Cau said even after hotter-than-expected inflation reports, investors are still expecting at least three rate cuts from the Fed starting June.
“…investors continue to see the glass half full on the soft landing narrative,” Barclays analysts noted.
But Barclays said if the Fed decides to take a more “aggressive” stance in response to the current resurgence of inflation, the optimistic mood in the market could reverse.
Luis Louro / shutterstock.com
Methodology
In this backdrop, we decided to take a look at the stocks insiders are selling. For that we used Insider Monkey’s stock screener to first list down all stocks that were sold by corporate insiders over the past two weeks. From these we chose 10 stocks with the highest insider selling activity in terms of dollar value. Some top names in the list include Nvidia Corp (NASDAQ:NVDA), T-Mobile Us Inc (NASDAQ:TMUS) and Palantir Technologies Inc (NYSE:PLTR). With each stock we have mentioned the number of hedge fund investors. But why is it important to keep tabs on hedge fund and insider activity? Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
10. First Watch Restaurant Group Inc. (NASDAQ:FWRG)
Number of Hedge Fund Investors: 8
First Watch Restaurant Group Inc. (NASDAQ:FWRG) recently saw insider selling activity as two company directors sold 6.9 million shares each on March 12 at $23.99 per share. This insider selling came just a few days after First Watch Restaurant Group Inc. (NASDAQ:FWRG) announced an underwritten secondary offering by certain funds managed by Advent International of 6 million common shares.
Insider Monkey’s database of 933 hedge funds shows that just eight hedge funds had stakes in the restaurant chain company First Watch Restaurant Group Inc. (NASDAQ:FWRG) as of the end of the fourth quarter of 2023. The most notable stake in First Watch Restaurant Group Inc. (NASDAQ:FWRG) is owned by Michael Pausic’s Foxhaven Asset Management which owns a $21 million stake in First Watch Restaurant Group Inc. (NASDAQ:FWRG).
Ave Maria Focused Fund made the following comment about First Watch Restaurant Group, Inc. (NASDAQ:FWRG) in its Q2 2023 investor letter:
“The Fund added three new positions in the first half of the year. Two of them are high-growth restaurant chains. First Watch Restaurant Group, Inc. (NASDAQ:FWRG) is a daytime only concept that operates in the US. The second restaurant, Alsea Group, is owner of the master franchise agreement for Domino’s Pizza in Latin America, as well as Starbucks in Latin America, Spain, and France. Both restaurant groups exhibit strong same-store sales and store-count growth as well as high returns on invested capital.”
9. CAVA Group Inc (NYSE:CAVA)
Number of Hedge Fund Investors: 19
Restaurant chain company CAVA Group Inc (NYSE:CAVA) ranks ninth in our list of the stocks with recent insider selling activity in 2024. Ronald M. Shaich, chairman of the board of directors of CAVA Group Inc (NYSE:CAVA), on March 4 sold 1.5 million shares of CAVA Group Inc (NYSE:CAVA) at $57.20 per share. Since then the stock has gained by about 10% in value.
As of the end of the fourth quarter of 2023, 19 hedge funds tracked by Insider Monkey had stakes in the company.
In addition to CAVA, stocks like Nvidia Corp (NASDAQ:NVDA), T-Mobile Us Inc (NASDAQ:TMUS) and Palantir Technologies Inc (NYSE:PLTR) are also on hedge funds’ radar.
8. CCC Intelligent Solutions Holdings Inc. (NASDAQ:CCCS)
Number of Hedge Fund Investors: 20
Several directors of CCC Intelligent Solutions Holdings Inc. (NASDAQ:CCCS), sold company shares after the SaaS company priced secondary offering, consisting of 43 million shares, at a price to the public of $11.42 per share. Lauren Young, a board director, sold 41,165,139 CCC Intelligent Solutions Holdings Inc. (NASDAQ:CCCS) shares at $11.33 on March 4, when the stock was trading at $11.86. Since then the stock has lost about 0.5%.
Artisan Small Cap Fund stated the following regarding CCC Intelligent Solutions Holdings Inc. (NASDAQ:CCCS) in its fourth quarter 2023 investor letter:
“Notable adds in the quarter included CCC Intelligent Solutions Holdings Inc. (NASDAQ:CCCS), Procore Technologies and Smartsheet. CCC Intelligent Solutions is the largest software as a service (SaaS) provider to both the accident claims process for US insurance companies and the US auto repair facilities market. We believe the company’s scale and longevity (founded in 1980) give it knowledge advantages in areas such as expected repair costs, parts availability and repair workflows. Furthermore, as a low-cost provider, the company benefits from insurers’ efforts to drive down repair costs and rental car times. We believe the company will drive growth by continuing to cross-sell and up-sell to its legacy customer base, expand its market share and monetize transactions over its platform. The company reported earnings results that were thesis affirming, and we took advantage of a secondary offering to build this GardenSM position.”
7. Sotera Health Co (NASDAQ:SHC)
Number of Hedge Fund Investors: 23
Ohio-based Sotera Health Co (NASDAQ:SHC) ranks seventh in our list of the stocks that are seeing insider selling activity so far in 2024. On March 4, Warburg Pincus & Co., which has a director status at Sotera Health Co’s (NASDAQ:SHC) board, sold 16,594,363 shares of Sotera Health Co (NASDAQ:SHC) at $14.31 per share. The stock is down 0.48% since then.
Last month, Sotera Health Co (NASDAQ:SHC) announced the launch of a secondary offering of 25 million shares of its common stock, par value $0.01 per share. These shares were being offered by selling stockholders, which include affiliates of Warburg Pincus and GTCR, as well as two members of management and one member of the Board of Directors of Sotera Health Co (NASDAQ:SHC).
Stocks that saw insider selling recently also include Nvidia Corp (NASDAQ:NVDA), T-Mobile Us Inc (NASDAQ:TMUS) and Palantir Technologies Inc (NYSE:PLTR).
McIntyre Partnerships stated the following regarding Sotera Health Company (NASDAQ:SHC) in its fourth quarter 2023 investor letter:
“The notable outlier to our “generally good” overall portfolio was Sotera Health Company (NASDAQ:SHC), where the settlement I was expecting drove shares up by over 100% in January 2023. In response to the outsized move, I reduced the position by roughly half. After its January surge, SHC’s shares have largely been range-bound. Despite the significant gain and lackluster performance since, I believe SHC remains a compelling investment. It is the fund’s largest position, and I go into greater depth below.
At quarter end, our exposures are 102% long, 6% short, and 96% net. Our five largest positions are SHC, OSW, GTX, record labels, and STHO/SAFE, and account for roughly 80% of assets.
In a vacuum, SHC screens as my ideal type of business: one half of a duopoly market with good long-term growth where the product sold is mission critical to customers, with high switching costs, yet the product’s cost is immaterial to their customers. In the case of SHC, the company is one of two scaled outsourced providers of medical device and pharmaceutical sterilization services. SHC is diversified across almost all major medical device and pharmaceutical manufacturers, boasts a 100% retention rate with top customers, and has consistently grown sales at close to 10%. Further, sterilization represents ~1% of their customers’ cost of goods sold, and SHC has an ~55% EBITDA margin. Normally, a consistent 10% growth story with 55% margins would trade at a significant multiple. Indeed, from when SHC IPOed in late 2020 until legal fears derailed the stock in fall 2022, shares consistently traded over 18x EV/EBITDA and 25x P/E, yet shares currently trade less than 12x my 2024 EV/EBITDA and 15x my 2024 EPS…” (Click here to read the full text)
6. Ares Management Corp (NYSE:ARES)
Number of Hedge Fund Investors: 29
Antony Ressler, co-founder and Executive Chairman of Ares Management Corp (NYSE:ARES), on March 7 sold three million shares of the alternative investment management company at $130.30 per share. Since then through March 15 the stock has lost about 2.5% in value.
Click to continue reading and see Insiders are Selling These 5 Stocks in 2024.
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Disclosure. None. Insiders are Selling These 10 Stocks in 2024 is originally published on Insider Monkey.