Corporate insiders, particularly managers and Board members of publicly traded corporations, generally possess a lot more up-to-date information about their company than any analyst or other outsider. While insider purchases mostly convey positive information about a company’s future prospects, it is not entirely clear what information insider sales convey. At the end of the day, there is a wide variety of motives for insiders to sell shares, including liquidity needs or need to reduce risk by diversifying, so some insider sales may be less informative to the investment community.
Although most researchers studying the ability of insiders to time the market conclude that insider selling is not indicative of future performance, investors would be wise to incorporate insider selling metrics into their stock selection and analysis process. The main argument for tracking insider selling is that insiders tend to sell shares when their companies’ valuations are approaching or even exceeding their “true” and “fair” market value. Put it differently, insiders’ contrarian approach to investing may point to clear exit points for equity investments. With this in mind, the following article will discuss the recent insider selling activity registered at three U.S. publicly traded companies.
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Provider of Financial Management Services Registers Insider Selling
Intuit Inc. (NASDAQ:INTU) has seen three different insiders unload shares so far in June, albeit two of them sold freshly-exercised stock options. Laura A. Fennell, Executive Vice President, General Counsel and Secretary, discarded 10,056 shares on Monday at prices ranging from $107.26 to $107.41 per share. Following the recent purchase, Ms. Fennell continues to own a mere 1,530 shares.
The maker of QuickBooks and TurboTax software products has seen its shares advance by 11% since the beginning of 2016. Intuit Inc. (NASDAQ:INTU)’s QuickBooks small business accounting software assists businesses in tackling accounting and payroll, while TurboTax represents the best-selling tax software. The company has greatly benefited from the global market transition from paper-based, human-produced, and brick-and-mortar bound services to connected services. Indeed, the increased availability of the Internet has revolutionized the way people are managing their financial tasks. Intuit’s net revenue for the first nine months of fiscal 2016 that ended April 30 was $3.9 billion, up 13% relative to the same period of the prior fiscal year.
Intuit fell out of favor with the hedge funds followed by Insider Monkey during the first quarter of 2016, as the number of funds invested in the company declined to 21 from 25 quarter-over-quarter. The 21 asset managers accumulated nearly 3% of the company’s total number of outstanding shares. The provider of business and financial management solutions pays shareholders a quarterly dividend of $0.30 per share, which equates to an annual dividend yield of 1.11%. Ken Griffin’s Citadel Advisors LLC upped its position in Intuit Inc. (NASDAQ:INTU) by 14% during the March quarter to 2.37 million shares.
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The next page of this article will discuss the insider selling activity registered at two other companies.