Notable insider selling has been detected this week in the shares of three companies: Comfort Systems USA, Inc. (NYSE:FIX), Bofl Holding, Inc. (NASDAQ:BOFI), and Balchem Corporation (NASDAQ:BCPC). We’ll take a look at the action surrounding each and study the companies in question to attempt to get a gauge on the insider activity.
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Tracking the activity of insiders and hedge funds in a stock is a powerful tool that can provide valuable insight to investors. While some investors scoff at the notion of monitoring hedge fund activity, believing their poor returns in recent years to be a reflection of poor stock picking ability, that is not actually the case. Hedge funds have underperformed the market for several reasons which don’t actually have anything to do with stock picking, but rather with the composition of their investments. We have found through extensive research that the top small-cap picks of hedge funds are capable of generating high returns and built a system around this premise. In the 35 months since our small-cap strategy was launched it has returned over 123% and beaten the S&P 500 ETF (SPY) by more than 65 percentage points (read more details). Tracking insider activity meanwhile is just as important, as research studies have proven the efficacy of piggybacking insider purchases.
Let’s start with Comfort Systems USA, Inc. (NYSE:FIX), a company which installs and services heating and air conditioning ventilation and systems, in addition to other construction and business services. Two insiders have made a total of three sales of shares over the past two days, with President and CEO Brian Lane selling 12,039 shares on August 10, and Director Alfred Giardenelli selling 10,000 shares on August 10 and another 5,000 shares on August 11. Seeing insiders cashing in on some of their holdings isn’t surprising given the robust growth of the stock this year, with it up by 65% in 2015, pushing the company’s market cap over the billion-dollar mark. Recently, shares surged on July 31 following the company’s second quarter results, when it handily topped earnings estimates by nearly 50%, pulling in $0.35 per share. Zacks upgraded the company to a ‘Strong Buy’ from a ‘Hold’ shortly after, which contributed to a strong push for another week until yesterday, when the insider selling may have contributed to the stock being pushed down by about 7%. Nonetheless, investors like Chuck Royce’s Royce & Associates have to be quite pleased with its performance. The mutual fund holds 755,722 shares of Comfort Systems USA, Inc. (NYSE:FIX) as of June 30, selling a handful of shares during the second quarter.
