Interim CEO of Struggling Nutritional Supplements Retailer Buys Nearly $5 Million Worth of Stock, Plus Other Insider Trading

Different investors employ various trading strategies and follow different investment philosophies, so they tend to look at a wide array of aspects when deciding whether to buy, keep or sell a certain company’s shares. Insider trading behavior is one key aspect investors need to monitor, as shifts in insider sentiment could serve as accurate indicators of future stock performance. Corporate insiders are widely known for following the pattern of buying low and selling high – a contrarian approach to investing that has enabled them to beat stock market gauges over the years.

While insider buying appears to be quite easy to interpret, investors should be aware of the fact that insider selling could be misinterpreted quite often. As a general rule, insider sales are considered less informative than purchase transactions, because there is a wide range of reasons for corporate insiders to sell shares. Some of these reasons include personal cash needs, tax payments, or simple portfolio diversification. However, if I were investing my cash into a company’s stock, I would definitely be troubled by heavy insider selling regardless of the reasons corporate insiders sell shares. Hence, abundant insider selling may drive some investors to run for the exits. That said, this article will discuss a set of insider transactions reported with the SEC on Thursday.

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Interim CEO of Struggling Nutritional Supplements Retailer Buys Nearly $5 Million Worth of Stock

To start with, the current head of GNC Holdings Inc. (NYSE:GNC) snapped up a large number of shares at the beginning of the week. Robert F. Moran, interim Chief Executive Officer since late July 2016, bought an aggregate of 592,259 shares on Tuesday at prices varying from $7.64 to $8.83 per share. Mr. Moran currently owns a total of 653,271 shares following the massive purchase.

The global specialty retailer of health, wellness and performance products has seen its market capitalization decline by a disturbing 70% in the past 12 months. GNC Holdings Inc. (NYSE:GNC) recently released disappointing fourth-quarter financial results, as well as announced the suspension of its $0.20-dividend in order to free up around $55 million of cash to reduce debt. The nutritional supplements retailer’s fourth-quarter revenue fell by 9% year-on-year to $570 million, while sales at existing company-owned stores in the U.S. and on the website dropped by 12% year-over-year. Some are concerned over the company’s huge pile of debt, which totaled $1.54 billion at the end of December. GNC Holdings had a mere $34.5 million in cash and cash equivalents at year-end. More importantly, the company has non-cancelable contractual obligations of $1.57 billion due in 2018 and 2019, so one should be careful when thinking of following Mr. Moran’s move. Stockholm-based HealthInvest Partners AB, founded by Anders Hallberg and Carl Bennet, trimmed its position in GNC Holdings Inc. (NYSE:GNC) by 13% during the fourth quarter to around 423,000 shares.

The second page of this insider trading article will reveal fresh insider buying observed at two other companies.

Founder and CEO of Advisory-Focused Investment Bank Boost Stake

The man in charge of PJT Partners Inc. (NYSE:PJT) also purchased shares in the past several days. Chairman and CEO Paul J. Taubman bought 23 shares on Tuesday, 5,775 shares on Wednesday and 2,702 shares on Thursday at prices between $36.60 and $37.14 per share. Mr. Taubman, the founder of PJT Partners, currently holds a stake of 433,500 shares.

The shares of the advisory-focused investment bank have gained 37% in the past year and Mr. Taubman keeps buying shares, which would normally be viewed as a very bullish signal. PJT Partners Inc. (NYSE:PJT)’s shares surged in early February when the company released its financial results for the fourth quarter. The firm reported revenues of $173.5 million for the December quarter, up significantly from $103.8 million reported for the year-earlier quarter. PJT Partners generated revenues of $499.4 million during 2016, as compared to $405.9 million during 2015. The company’s advisory revenues increased 32% year-on-year to $377.6 million due to an overall increase in the number of clients and size of fees mainly within the restructuring and special situations businesses. Jim Simons’ Renaissance Technologies LLC was the equity holder of 285,100 shares of PJT Partners Inc. (NYSE:PJT) at the end of December.

Freshly-Appointed Board Member at AmEx Acquires New Stake

American Express Company (NYSE:AXP) had not registered any insider buying since late January 2016 until this week. John J. “Jack” Brennan, appointed to the company’s Board of Directors in late January, acquired a stake of 4,000 shares on Tuesday at a price tag of $79.74 each.

The global services company has seen the value of its shares rise by 43% in the past 12 months. Just recently, analysts at Keefe, Bruyette, and Woods (KBW) upgraded American Express Company (NYSE:AXP) to ‘Outperform’ from ‘Market Perform’, citing “improved fundamentals and visibility.” Nonetheless, KBW analysts and other market participants acknowledge that the company’s main risks relate to the competitive environment, with some analysts predicting that AmEx could lose another 380 basis points of market share between 2016 and 2021. The market share loss could reach 420 basis points if American Express loses its co-branding partnership with Starwood Hotels & Resorts Worldwide. Meanwhile, KBW analysts raised their price target on AmEx to $91 from $81. Warren Buffett’s Berkshire Hathaway had 151.61 million shares of American Express Company (NYSE:AXP) in its portfolio at the end of 2016.

Let’s move on to the final page of the article, where we discuss fresh insider selling observed at two companies.

Cluster of Insider Selling at Independent Oil and Natural Gas Company

Six different insiders at Diamondback Energy Inc. (NASDAQ:FANG) offloaded shares at the beginning of the week, so let’s have a look at some of the most voluminous transactions. To start with, President and CEO Travis D. Stice discarded 51,000 shares on Tuesday at prices that fell between $106.70 and $107.66 per share, cutting his overall holding to 232,342 shares. Paul S. Molnar, Vice President of Exploration and Geoscience, sold 9,263 shares on the same day at a weighted average price of $106.98 per share. Mr. Molnar owns 47,563 shares after the Tuesday sale. Randall J. Holder, General Counsel and Vice President, unloaded 16,563 shares on Tuesday at prices from a low of $106.68 to a high of $107.39 per share, which cut his ownership to a mere 6,905 shares.

The shares of the independent oil and natural gas company have jumped 40% in the past 12 months, a jump that might have triggered the spike in insider selling. Diamondback Energy Inc. (NASDAQ:FANG), which focuses on the development, exploration and exploitation of unconventional onshore oil and natural gas reserves in the Permian Basin in West Texas, achieved production growth of more than 40% in the second half of the previous year as the commodity price environment recovered. The firm ended the year operating five rigs, recently added a sixth operating rig and plans to add two more rigs to the Delaware Basin. The number of asset managers within our system with stakes in Diamondback Energy increased to 41 from 35 during the fourth quarter. Rob Citrone’s Discovery Capital Management added a 427,000-share position in Diamondback Energy Inc. (NASDAQ:FANG) to its pool of holdings during the December quarter.

Executives at Boston-Based REIT Sell Shares Amid Declining Hedge Fund Sentiment

There were two members of Boston Properties Inc. (NYSE:BXP)’s executive team who offloaded shares this week. Raymond A. Ritchey, Senior Executive Vice President, sold out his entire stake of 35,000 shares on Wednesday at prices varying from $136.51 to $138.45 per share. Frank D. Burt, Senior Vice President, Secretary and General Counsel since 2003, discarded his entire stake of 2,523 shares on the same day for $137.61 each.

Boston Properties Inc. (NYSE:BXP), one of the largest owners and developers of officer properties in the United States, has seen the value of its stock rise by 20% in the past year. In early January, analysts at RBC Capital Markets upgraded the Boston-based real estate investment trust (REIT) to a popular top pick of 2017 from an ‘Outperform’ rating. “The company owns high quality assets in top tier office markets in the US, and we expect the portfolio should benefit from a stronger US economy in 2017,” said RBC analysts in a January note. Nonetheless, the hedge fund sentiment towards the REIT declined during the December quarter, as the number of hedge funds invested in Boston Properties dropped to 12 from 17 quarter-over-quarter. Ken Griffin’s Citadel Advisors LLC owned around 66,000 shares of Boston Properties Inc. (NYSE:BXP) at the end of December.

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