Massive Cluster of Insider Selling at Data Management Company and Other Insider Trading

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Although much research concludes that securities purchases on the part of insiders tend to beat broader market benchmarks by a significant margin, Insider Monkey does not recommend investors to blindly mimic each insider trade. Instead, insider trading metrics can serve as additional tools in one’s security analysis process – indicators that can be used to support larger investment theses.

More specifically, retail investors should focus on pairing insider trading activity with a general investment thesis rather than on blindly mimicking each insider purchase or sale. The larger investment thesis could be based on expected cash flow improvement, pressure from activist hedge funds or the possibility of a takeover, to name just a few. At the same time, investors could use insider buying and selling activity, particularly clusters of buying or selling, as a stock selection procedure. Normally there is a story behind each cluster of insider buying or selling, so strong insider trading activity could point to possible “buy” or “sell” candidates. With that in mind, the following article will discuss a set of noteworthy insider transactions reported with the SEC on Thursday.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively the most bullish on. Over the past year, this strategy generated returns of 39.7%, topping the 24.1% gain registered by S&P 500 ETFs. Insider Monkey’s enhanced small-cap strategy registered gains of more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points in the last 4.5 years (see the details here).

Cluster of Insider Buying at Independent Oil and Natural Gas Company

To begin with, there was a cluster of insider buying at Parsley Energy Inc. (NYSE:PE) at the beginning of the week. President and Chief Operating Officer Matthew Gallagher bought 32,985 Class A shares on Tuesday at prices varying from $30.06 to $30.45 per share, lifting his overall holding to 661,778 shares. Board member Jerry Windlinger snapped up 3,000 Class A shares on the same day at a price tag of $30.35 each, a purchase that increased Mr. Windlinger’s stake to 5,667 shares. Director A. R. Alameddine purchased 3,500 Class A shares on Wednesday at $30.94 apiece. Mr. Alameddine currently owns an aggregate of 92,988 shares.

The independent oil and natural gas company focused on unconventional oil and natural gas reserves in the Permian Basin has seen the value of its shares decline by 11% since the beginning of the year. Parsley Energy Inc. (NYSE:PE) recently agreed to buying certain assets in the oil-rich Permian Basin from privately-held Double Eagle Energy Permian LLC for around $2.8 billion. The deal encompasses undeveloped acreage and producing oil and gas properties, adding 71,000 net acres to Parsley Energy’s acreage in the Midland Basin. The deal is set to expand the company’s total acreage in the Permian Basin to 227,000 acres. While some say that the purchase looks expensive at $37,300 per undeveloped acre, others says that the deal looks cheap when comparing with an average of $45,000 per acre for other large Midland Basin transactions agreed last year. Israel Englander’s Millennium Management added a 5.59 million-share position in Parsley Energy Inc. (NYSE:PE) to its pool of holdings during the December quarter.

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Let’s move on to the next page of this insider trading article, where we discuss insider buying at two other companies.

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