J M Smucker Co (SJM) Registers Noteworthy Cluster of Insider Selling, Plus Four Other Companies with Notable Insider Trading Activity

Is insider trading behavior a good barometer for future stock performance? Yes and no! And let me explain why. Past research concludes that insider purchases indeed tend to outperform broader market benchmarks by a wider margin in the long-term, which makes us confident that insider buying activity does serve as a good barometer for future stock performance. But what about insider selling? Much research could not find strong evidence that insider selling is indicative of future underperformance, which could be explained by the proliferation of equity-based compensation packages. Corporate insiders are not only selling shares in their own companies because they believe their companies will underperform; most of the times directors and executives are selling shares simply because they need the cash for personal reasons that have nothing to do with the future prospects of their companies. Leaving this discussion aside, let’s have a look at a series of noteworthy insider transactions reported with the SEC on Tuesday.

Academic research has shown that certain insider purchases historically outperformed the market by an average of seven percentage points per year. This effect is more pronounced in small-cap stocks. Another exception is the small-cap stock picks of hedge funds. Our research has shown that imitating the 15 most popular small-cap stocks among hedge funds outperformed the market by nearly a percentage point per month between 1999 and 2012 (read more details here).

Real Estate Investment Company With Two Insiders Purchasing Shares

Kennedy-Wilson Holdings Inc. (NYSE:KW) had two corporate insiders, namely one director and one executive, buy shares earlier this week. Board member Stanley R. Zax purchased 50,000 shares on Tuesday at prices that ranged from $18.62 to $18.85 per share, lifted his overall holding to 234,800 shares. More importantly, Chairman and Chief Executive Officer William J. McMorrow snapped up two blocks of 10,000 shares each on the same day, one of which is held through the William J. McMorrow Revocable Trust that currently owns 11.82 million shares. The two blocks were purchased at prices that ranged from $18.78 to $18.87 per share. Mr. McMorrow also holds a direct ownership stake of 1.99 million shares.

The market value of the global real estate investment company is down 21% since the beginning of the year. Kennedy-Wilson Holdings Inc. (NYSE:KW), which focuses on multifamily and commercial properties in the U.S., United Kingdom, Ireland, Spain, Italy and Japan, recently announced a quarterly dividend of $0.14 per share. The dividend payment equates to an annual dividend of $0.56 per share and an annual yield of 2.96%. Alan S. Parsow’s Elkhorn Partners reported ownership of 4.03 million shares of Kennedy-Wilson Holdings Inc. (NYSE:KW) in its latest 13F.

Community Bank’s President Acquires Massive Block of Shares

Green Bancorp Inc. (NASDAQ:GNBC) saw one of its most informed executives buy shares several trading sessions ago. President Geoffrey D. Greenwade bought 38,000 shares on Monday at prices varying from $8.79 to $8.91 per share. After the recent purchase, Mr. Greenwade currently owns a stake of 87,606 shares. The bank holding company for Green Bank N.A. recorded a cluster of insiders buying in early February (read more details), so I added the stock to my watchlist. The stock returned nearly 31% since then, but insiders keep buying shares.

Green Bancorp Inc. (NASDAQ:GNBC)’s net interest income before the provision for loan losses was $34.2 million for the first quarter of 2016, up from $20.5 million recorded a year ago. The increase was mainly driven by a massive increase in average loan volume mainly due to the acquisition of Patriot Bancshares Inc. in October 2015, as well as successful marketing activity of the bank’s portfolio bankers. Jim Simons’ Renaissance Technologies LLC held 207,800 shares of Green Bancorp Inc. (NASDAQ:GNBC) at the end of March.

The next page of this insider trading article will reveal notable insider activity registered at three other companies.

Battered Biopharmaceutical Company Registers Insider Buying

The man in charge of Mirati Therapeutics Inc. (NASDAQ:MRTX) also bought a sizable block of shares earlier this week. President and CEO Charles M. Baum purchased 20,000 shares on Tuesday at prices that ranged from $6.96 to $7.14 per share, boosting his ownership to 48,556 shares.

The recent insider buying comes shortly after the clinical-stage biopharmaceutical company focused on developing oncology products issued a disappointing update on three ongoing clinical programs in patients suffering from non-small cell lung cancer (NSCLC) and other solid tumors. Mirati Therapeutics Inc. (NASDAQ:MRTX) has seen its market value plummet by 54% in the past month and 77% since the start of 2016. The developer of therapies against cancer revealed that its glesatinib, evaluated in a Phase 1b clinical trial in patients with NSCLC, showed promising results, but the majority of patients enrolled experienced dose reductions or interruptions due to episodes of diarrhea. Leerink Partners analysts downgraded Mirati Therapeutics to ‘Market Perform’ and cut the price target on the stock to $20 from $37, citing lower probability of success for glesatinib. Baker Bros. Advisors, run by Julian Baker and Felix Baker, had 3.27 million shares of Mirati Therapeutics Inc. (NASDAQ:MRTX) in its portfolio at the end of the first quarter.

Diversified Manufacturing Company Registers Noteworthy Insider Selling

The insider selling activity Carlisle Companies Inc. (NYSE:CSL) has been gaining steam in recent weeks and months, whereas the insider buying activity has been mute in recent years. Executive Chairman David A. Roberts offloaded 24,740 shares on Monday at prices ranging from $99.29 to $100.06 per share, all of which were held in trust funds for the benefit of his children. Following the recent sale, Mr. Roberts currently holds a direct ownership stake of 147,617 shares, along with an additional indirect ownership stake of 107,336 shares.

The diversified manufacturing company has seen its market capitalization increase by 12% since the beginning of the year. Carlisle Companies Inc. (NYSE:CSL)’s net sales for the first quarter of 2016 were $794.0 million, up from $709.3 million a year earlier. The increase in the company’s top line was mainly driven by a series of acquisitions, as well as strong demand for the company’s commercial roofing, commercial aerospace, and medical technology products. Matthew Lindebaum’s Basswood Capital reported ownership of nearly 338,000 shares of Carlisle Companies Inc. (NYSE:CSL) through the latest round of 13Fs.

Giant Food Company Registers Cluster of Insider Selling

J M Smucker Co (NYSE:SJM) registered a cluster of insider selling earlier this week, involving three different corporate insiders. To begin with, Mark R. Belgya, Vice Chair and Chief Financial Officer, sold 4,500 shares on Monday at a weighted average price of $144.20, cutting his direct ownership to 46,820 shares. Moreover, former Vice Chairman Vincent C. Byrd, who recently retired following 39 years with the company, discarded 14,512 shares on the same day at prices that fell between $144.30 and $144.84 per share, trimming his stake to 69,670 shares. Last but certainly not least, Steven T. Oakland, Vice Chair and President of U.S. Food & Beverage, sold 5,453 shares on Monday at $145.00 apiece. Following the recent sale, Mr. Oakland continues to own 46,968 shares.

J M Smucker Co (NYSE:SJM), the giant food company known for its jelly, has seen its shares advance 16% since the beginning of 2016. Just recently, analysts at Jefferies downgraded the stock to ‘Hold’ from ‘Buy’ while raising the price target to $143 from $140, saying that risks and rewards are balanced. The financial hub said that J M Smucker’s management plans to spend an additional $40 million on marketing campaigns in 2017, which should put pressure on its top line growth. Dan Loeb’s Third Point LLC cut its stake in J M Smucker Co (NYSE:SJM) by 54% during the March quarter to 775,000 shares.

Disclosure: None