Largest U.S. Beauty Retailer and Single-Family REIT Register Massive Insider Selling, Plus Other Insider Transactions

In a fresh study on insider trading, several researchers from a top-tier U.S. university split insider trading into two camps: predictable or “routine” insider trading; and information-rich or “opportunistic” insider trading that contains strong predictive power for the future of firms. The so-called routine insider selling is usually triggered by diversification or liquidity reasons, because corporate insiders’ holdings of company stock tend to comprise a high portion of their wealth. For instance, insider trading watchers might have noticed that Bill Gates trades in a pre-announced and routine fashion, but that does not necessarily mean Mr. Gates foresees bad times ahead for Microsoft Corporation (NASDAQ:MSFT).

The aforementioned study on insider trading concluded that the abnormal returns associated with routine trades were essentially zero, whereas information-rich insider transactions yielded value-weighted abnormal returns of 82 basis points per month. Corporate insiders have a better understanding of their company’s business and industry environment than most of us, which is one possible explanation for their success at trading securities. The law requires that information be “material” to constitute illegal insider trading, so insiders can keep buying and selling securities legally despite having a clear edge over outsiders. Without further ado, let’s have a look at a set of notable insider transactions reported with the SEC on Thursday.

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Executive Chairman of Diversified Consumer Products Company Purchases Shares

A well-informed corporate insider at Spectrum Brands Holdings Inc. (NYSE:SPB) increased his stock holding in the company this week. David. M. Maura, Executive Chairman of the company’s Board of Directors, purchased 2,000 shares on Thursday at prices ranging from $127.10 to $127.87 per share. Following the recent transaction, Mr. Maura currently owns 279,633 shares.

The diversified global branded consumer products company sells products in seven major product categories: consumer batteries, small appliances, personal care, hardware and home improvement, pet supplies, home and garden, and auto care. Spectrum Brands Holdings Inc. (NYSE:SPB) has seen the value of its shares increase by 27% since the beginning of the year. The company reported net sales of $407.7 million for the nine months that ended July 3, up 12.1% year-over-year. Organic net sales grew by 4.9% year-on-year. There were 23 hedge funds tracked by Insider Monkey with long positions in the diversified consumer products company at the end of June, down from 25 recorded at the end of March. Ken Griffin’s Citadel Advisors LLC had around 618,000 shares of Spectrum Brands Holdings Inc. (NYSE:SPB) among its holdings at the end of the second quarter.

The next two pages of this insider trading article will discuss a few other notable insider transactions reported with the U.S. SEC on Thursday.

Board Member of Healthcare Cost Containment Solutions Provider Buys Shares

One member of HMS Holdings Corp (NASDAQ:HMSY)’s boardroom also purchased some shares earlier this week. Robert Becker, appointed to the company’s Board of Directors in late January of 2016, snatched up 5,000 shares on Wednesday at a price tag of $21.96 each; the purchase boosted his ownership to 11,701 shares.

HMS Holdings Corp (NASDAQ:HMSY), a provider of cost containment solutions in the healthcare industry, has seen its market capitalization skyrocket by 76% since the start of the year. Earlier this month, the company announced the acquisition of a privately-held care management software company, called Essette, for around $20 million in cash. Essette offers a web-based care management platform that assists healthcare organizations in identifying, engaging and managing at-risk patient populations. An important reason behind the aforementioned acquisition relates to the recurring revenue potential for the Essette workflow solutions. Carson Yost’s Yost Capital Management was the owner of 953,609 shares of HMS Holdings Corp (NASDAQ:HMSY) at the end of the April-June quarter.

Interim Co-CEO of Specialty Finance Company Boosts Holding

A highly-influential executive at Ares Commercial Real Estate Corp (NYSE:ACRE) also bought some shares this week. Robert L. Rosen, Chairman and Interim co-Chief Executive Officer, acquired 4,011 shares on Tuesday and 5,989 shares on Wednesday at prices that fell between $12.20 and $12.44 per share. Following these transactions, Mr. Rosen currently owns 56,002 shares.

The shares of the specialty finance company that operates as a principal lender and mortgage banker with respect to loans collateralized by multifamily and senior-living properties are up 9% thus far in 2016. In late June, Ares Commercial Real Estate Corp (NYSE:ACRE) agreed to sell its mortgage banking business to asset manager Cornerstone Real Estate Advisors LLC for $93 million in cash. The deal doubled Cornerstone’s multifamily loan portfolio to $10 billion. Jim Simons’ Renaissance Technologies LLC trimmed its position in Ares Commercial Real Estate Corp (NYSE:ACRE) by 48% during the June quarter to 304,400 shares.

The final page of this article will discuss noteworthy insider selling registered at two other companies.

Board Member of Largest U.S. Beauty Retailer Offloads Sizeable Blocks of Shares

Shortly after an insider bought shares earlier this month, another insider at Ulta Salon, Cosmetics & Fragrance Inc. (NASDAQ:ULTA) offloaded two sizeable blocks of shares. Charles Heilbronn, Board member since 1995, liquidated 900,000 shares on Wednesday for $229.56 each, all of which were held indirectly through Mousseluxe SARL that owns 2.10 million shares after the sale. Mr. Heilbronn discarded an additional 25,000 shares at $229.56 apiece, a sale that trimmed his direct ownership stake to 58,928 shares.

The shares of the largest beauty retailer in the United States are 25% in the green so far this year. Ulta Salon, Cosmetics & Fragrance Inc. (NASDAQ:ULTA)’s net sales for the three months that ended July 30 were $1.07 billion, up from $877.0 million recorded for the same period of the previous year. The company’s comparable sales grew an impressive 14.4% year-over-year, reflecting an 12.6% increase at the company’s retail and salon stores and a 54.9% jump in the company’s e-commerce business. The number of smart money investors from our system invested in Ulta rose to 36 from 32 during the June quarter. John Griffin’s Blue Ridge Capital owns 1.06 million shares of Ulta Salon, Cosmetics & Fragrance Inc. (NASDAQ:ULTA) as of June 30.

COO of Single-Family REIT Discards Shares

A well-informed member of American Homes 4 Rent (NYSE:AMH)’s executive team also discarded a large amount of shares this week. Chief Operating Officer John E. Corrigan liquidated 91,324 shares on Thursday through a private sale at the closing price on September 14 of $20.94. The shares were held via a limited liability company formed for the benefit of Mr. Corrigan and his family. After the recent sale, the COO currently owns 277,875 shares through the LLC.

The real estate investment trust focused on acquiring, renovating, leasing and operating single-family homes as rental properties has seen its market value increase by 26% since the start of the year. American Homes 4 Rent (NYSE:AMH) owned 48,038 single-family properties at the end of June, including 1,582 properties held for sale, as compared to 38,780 single-family properties owned at the end of December 2015. The REIT’s core property revenues from same-home properties increased by 5.4% year-on-year to $101.2 million during the three months that ended June 30. Jason Karp’s Tourbillon Capital Partners reported ownership of 9.86 million shares of American Homes 4 Rent (NYSE:AMH) in its 13F for the second quarter.

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