Insiders Buy Shares of Corrections Corp Amid Drop; Four Other Companies with Noteworthy Insider Trading

Most indexes around the world are in the red on Monday amid a strengthening dollar as investors are looking forward to the meeting of central bank chiefs at the end of the week, with the expectation that Fed chair Janet Yellen will hint towards an interest rate hike in September. Meanwhile, oil prices are heading lower as Iran still hasn’t made a decision regarding its attendance at the OPEC’s production meeting next month and experts express concern that the meeting won’t affect oversupply.

On the US stock market, the week is expected to be quiet until Friday, when Yellen’s talk is scheduled. Meanwhile, corporate insiders have reported some interesting transactions and, in this article, we are going to take a closer look at several companies with noteworthy insider buying and selling.

Following insider trading is a strategy that is overlooked by many, although there have been studies conducted that show the profitability of imitating corporate insiders (see more details here). Aside from insiders, investors can also analyze how smart money investors are positioned towards a stock. This is a key aspect of our strategy that generated a double-digit alpha over the long-run (read more about our strategy).

Insider Trading

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Having said that, let’s dig deeper into some recent insider transactions, starting with the biggest company on our list, Facebook Inc (NASDAQ:FB). In 2015, Mark Zuckerberg and his wife, Priscilla Chan, announced that they would give away 99% of their stakes in Facebook Inc (NASDAQ:FB) to charity over their lifetime and set up the Chan Zuckerberg Initiative for this purpose. Last week, the CEO of Facebook reported the sale of 767,905 shares of the company held by CZI. Based on the weighted average price, the total value of the transactions amounted to nearly $95 million. After Zuckerberg announced the creation of the CZI, he moved 99% of his stake in Facebook to the organization and said it would sell around $1.00 billion worth of stock each year at first. Aside from Zuckerberg, several other insiders reported selling shares last week, although all those transactions were effected pursuant to Rule 10b5-1 trading plans, which allow insiders to sell predetermined amounts of shares at a predetermined time. Facebook’s stock has had a decent run so far this year, having gained over 19% year-to-date, as the company managed to surpass analysts’ forecasts each quarter reported this year and registered growth in both Monthly Active Users and Mobile Monthly Active Users. Among the smart money investors we track, Facebook Inc (NASDAQ:FB) ranks as the most popular stock as of the end of June, with 148 investors having reported a long position in the latest round of 13F filings, although this number was down from 164 funds that held shares at the end of March (the number of 13F filing funds in our database dropped by a net total of 17 quarter-over-quarter, which likely accounts for some of the drop in Facebook ownership).

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Texas Roadhouse Inc (NASDAQ:TXRH) is another company that saw a top executive sell shares last week. The company’s chairman and CEO, Wayne Kent Taylor, disclosed the sale of 150,000 shares in three transactions at an average price of $46 per unit. The shares were held directly by Taylor and following the sale, he owns around 4.23 million shares directly and another 1.1 million shares held indirectly through Taylor Family Partners, Ltd. Texas Roadhouse Inc (NASDAQ:TXRH) operates over 500 restaurants in 49 states and five international locations. Its stock has gained over 27% year-to-date despite a slump registered at the beginning of August, when the company reported second quarter EPS of $0.47, higher than estimates of $0.45, but missed revenue expectations by $1.12 million with a figure of $508.81 million. Nevertheless, it experienced 4.5% comparable-restaurant sales growth at company restaurants and 2.6% growth at franchise locations. Among the funds in our database, Texas Roadhouse Inc (NASDAQ:TXRH) is not very popular, with just 14 funds holding less than 3% of its stock as of the end of June.

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On the next page, we are going to take a look at the insider selling registered at World Wrestling Entertainment, Inc. (NYSE:WWE), as well as at two companies with insider buying.

Two insiders sold shares of World Wrestling Entertainment, Inc. (NYSE:WWE) last week, including Linda and Vincent McMahon’s GRAT trust, which disposed of some 1.55 million shares, as we reported earlier. In another Form 4 filing with the SEC, WWE’s Chief Revenue and Marketing Officer, Michelle D. Wilson, reported the sale of 27,900 shares on Thursday. The securities were sold in one transaction at an average price of $20.88 per share and following the sale, Wilson directly holds 343,259 shares. So far in August, several other insiders have sold shares of World Wrestling Entertainment, including Kevin Dunn, Executive Vice President, Television Production, who unloaded 56,000 shares on August 12 and currently owns 387,173 shares. Shares of World Wrestling Entertainment, Inc. (NYSE:WWE) have gained over 16% since the beginning of the year, but are trading at over 40-times forward earnings, which might suggest that the stock is overvalued. Just ten funds tracked by Insider Monkey reported stakes in World Wrestling Entertainment, Inc. (NYSE:WWE) as of the end of June, although the largest shareholder among them, David Forster and Peter Wilton‘s IBIS Capital Partners boosted its exposure by 168% on the quarter to 599,477 shares.

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Small-cap manufacturer of communication equipment, KVH Industries, Inc. (NASDAQ:KVHI), registered its first insider transaction this year, according to our records. On Friday, John McCarthy, who serves as the interim Chief Financial Officer of KVH Industries, Inc. (NASDAQ:KVHI), reported the acquisition of his first stake, totaling 8,700 shares. The securities were acquired in multiple transactions at an average price of $8.68 per share and are held directly by the insider. McCarthy was appointed as interim CFO in May, having replaced Peter Rendall. KVH Industries’ stock is down by 11% this year, mainly due to a slump following the release of worse-than-expected revenue and EPS for the first quarter in May. Nevertheless, for the second quarter, KVH Industries posted EPS of $0.08 on revenue of $46 million, which topped analysts’ estimates by $0.02 and $1.48 million, respectively. Among the investors we track, six funds held shares of KVH Industries, Inc. (NASDAQ:KVHI) heading into the third quarter.

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Corrections Corp Of America (NYSE:CXW) was in the spotlight on Thursday as the stock plunged by 35% after the US Department of Justice said it plans to phase out its use of private prisons. Meanwhile, also on Thursday, three insiders of Corrections Corp of America acquired shares. The largest transaction was reported by independent chairman of the board, Mark A. Emkes, who acquired 10,000 shares at $17.78 per unit and now owns 20,755 shares. President and CEO, Damon T. Hininger, also bought 2,870 shares at $16.60 apiece, raising his stake to 200,331 shares. A much smaller amount was bought by Scott Irwin, Vice President, General Counsel and Secretary of Corrections Corp Of America (NYSE:CXW), who reported the purchase of 300 shares at $17 per unit and owns 400 shares following the transaction. The drop registered last Thursday sent Corrections Corp of America’s stock down by 25% year-to-date. At the end of June, 15 funds tracked by Insider Monkey held shares of Corrections Corp Of America (NYSE:CXW), up from 13 funds a quarter earlier.

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Disclosure: None