Lands’ End Inc. (LE), Nike Inc. (NKE) and One Low-Priced Biopharmaceutical Company Register Insider Buying

Last week’s dollar volume of insider buying decreased by half relative to the volume registered in the prior week, whereas the volume of insider selling more than doubled week-over-week. This outcome might have been expected by some, given the impressive post-Brexit rally after equities plunged over the two sessions immediately after the United Kingdom’s referendum to leave the European Union. In fact, the Standard & Poor 500 Index is just 1.5% below its record high reached last May, so it should not be surprising that insiders are offloading their holdings at a high pace lately.

Buy why should investors keep tabs on insider trading metrics? Past research indicates that corporate insiders tend to earn abnormal returns when buying shares, which means they have a good feel for near-term and longer-term developments within their firms. Most insiders own shares in their companies even without purchasing shares on the open market due to the increased usage of equity-based compensation, so their purchases tend to convey bullish or positive information on nearly all occasions. Having this in mind, the following article will discuss the insider trading activity at three companies that had their insiders report insider buying with the SEC on Friday.

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).

Struggling Retailer Registers Some Insider Buying

Lands’ End Inc. (NASDAQ:LE) saw one member of its Board of Directors buy some shares last week. Elizabeth Leykum, who joined the company’s boardroom in April 2014, acquired 5,000 shares on Wednesday at $16.90 apiece, all of which are held by Serenade Capital LLC.  The Texas-based limited liability company was founded by Ms. Leykum in May of 2016 and currently owns 6,575 shares of Lands’ End.

The multi-channel retailer of clothing, accessories and footwear has lost 28% of its market value since the beginning of 2016. Lands’ End Inc. (NASDAQ:LE), spun-off from Sears Holdings Corp (NASDAQ:SHLD) in 2014, recently released its financial results for the first quarter of fiscal 2016 that ended April 29. The company reported net revenue of $273.43 million for the quarter, down from $299.39 million posted for the same period of the previous year. The top line was negatively impacted by both internal and external factors. The primary external factor that put pressure on sales was the overall weakness in the retail environment, which resulted in aggressive discounting and promotional activity. Meanwhile, the internal factors included a planned reduction in catalog circulation, among other things. Earlier this month, Lands’ End announced its was introducing the first Lands’ End surf collection in an attempt to capitalize on the athleisure wear trend. Athleisure clothing has been a fast-expanding business as of late, with activewear sales anticipated to reach $83 billion by 2020.

There were 12 hedge fund vehicles followed by Insider Monkey with equity investments in the struggling retailer at the end of the March quarter, which amassed roughly 33% of the company’s outstanding common stock. Edward Lampert’s ESL Investments was the owner of 6.72 million shares of Lands’ End Inc. (NASDAQ:LE) at the end of March.

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

The World’s Largest Maker of Athletic Gear Has Board Member Buy Some Shares

Nike Inc. (NYSE:NKE) also had one Board member buy shares this past week. John C. Lechleiter, who was appointed to the company’s Board of Directors in June 2009, snatched up 1,000 Class B shares on Friday at a price tag of $55.09 each. After the recent purchase, Mr. Lechleiter currently owns 23,682 Class B shares.

The world’s largest maker of athletic gear has seen its market capitalization decline by 11% since the start of 2016. Just recently, Nike Inc. (NYSE:NKE) announced that co-founder Phil Knight retired as Chairman of the company’s Board and would continue to serve as Chairman Emeritus. At the same time, Apple Inc. (NASDAQ:AAPL)’s CEO, Tim Cook, a long-serving member of the athletic gear marker’s board became the lead independent director. At the end of June, Nike released its financial results for its fourth quarter and full year that ended May 31, showing that fourth-quarter revenues jumped by 6% year-over-year to $8.2 billion. Meanwhile, fiscal 2016 revenues rose 6% year-over-year to $32.4 billion, up an impressive 12% on a constant currency basis. Analysts at Jefferies recently cut their price target on the athletic retailer to $65 from $67 and reiterated their “Buy” rating on the stock, citing market share pressure in the first half of fiscal 2017. Jefferies anticipate sustained improvement in the North America sector of the business, further saying that Nike is a “winning stock”.

The number of asset managers from our database with long positions in Nike climbed to 64 from 63 during the first quarter of 2016, whereas the overall value of those positions shrunk to $3.65 billion from $4.48 billion quarter-on-quarter. Stephen Mandel’s Lone Pine Capital reported owning nearly 12.00 Class B million shares of Nike Inc. (NYSE:NKE) in its latest 13 F.

Low-Priced Biopharmaceutical Stock with Insider Buying

The man in charge of Hemispherx BioPharma Inc. (NYSEMKT:HEB) bought several blocks of shares over the past several trading sessions. President and CEO Thomas K. Equels snapped up 59,000 shares on Wednesday, 56,000 shares on Thursday and 56,000 shares on Friday at prices ranging from $0.118 to $0.12 per share. After the recent purchases, Mr. Equels currently holds an ownership stake of 1.66 million shares.

The shares of the specialty pharmaceutical company may be delisted from trading on the NYSE MKT should the company fail to demonstrate significant price improvement through mid-September. However, Hemispherx BioPharma Inc. (NYSEMKT:HEB) plans to seek approval of a reverse stock split at its annual meeting of shareholders, which is expected to take place in the middle of August. The company’s flagship products include Alferon N Injection, a genital warts treatment, and the experimental therapeutic Ampligen. Just recently, the Philadelphia-based biotechnology company obtained intellectual property rights for its two products held by its former CEO, Dr. William A. Carter. More importantly, the company recently implemented a series of austerity measures, including the reduction of executive compensation and elimination of non-essential contractors and personnel. Hemispherx BioPharma’s new strategy involves seeking licensing deals or development partnerships with other biopharmaceutical firms to advance the development and market reach of the two products.

There were a mere three money managers tracked by our team with stakes in the biopharmaceutical company at the end of the first quarter. Jim Simons’ Renaissance Technologies had 1.85 million shares of Hemispherx BioPharma Inc. (NYSEMKT:HEB) among its holdings at the end of March.

Disclosure: None