It is often believed that insider selling represents a tip-off that corporate insiders anticipate their company’s shares to underperform. However, mild or even heavy insider selling does not necessarily mean that a stock is destined to collapse. At the end of the day, the well-known saying that insiders sell shares for wide array of reasons holds a grain of truth.
Corporate insiders, namely executives and Board members, usually sell shares for reasons ranging from expiring stock options to financial planning, with most insiders selling shares for personal financial reasons unrelated to much-feared bad times ahead for their companies. Insider Monkey tries to strip away the routine insider selling by ignoring insider transactions conducted under pre-arranged trading plans, usually associated with financial planning on the part of insiders, or transactions related to freshly-exercised stock options. The spur-of-the-moment insider selling analyzed by our team should not necessarily be interpreted as conveying bearish information either, as insiders can still sell shares spontaneously for personal needs without taking into consideration firm-specific developments and prospects. Bearing that in mind, the following article will mostly discuss fresh insider selling reported with the SEC on Wednesday.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Board Member at Expanding Bank Buys Shares After Merger Announcement
Before we proceed to discussing insider selling, let’s have a quick look at some insider buying observed at Southern National Banc. of Virginia Inc. (NASDAQ:SONA). Board member Charles A. Kabbash snatched up a stake of 11,000 shares on Wednesday at a price tag of $9.09 per share, a stake held in the Charles A. Kabbash Revocable Trust. Mr. Kabbash also owns 26,073 shares jointly with his spouse, as well as an additional 42,585 shares held directly.
In mid-December, the holding company for chartered bank Sonabank announced plans to merge with Eastern Virginia Bankshares Inc. (NASDAQ:EVBS), the holding company of EVB. The soon-to-be merged company will have roughly $2.4 billion in total assets, $2.0 billion in total deposits, and $1.8 billion in total loans. The combined company, which will assume the Southern National Bancorp of Virginia Inc. name for the holding company and the Sonabank name for banking operations, will have 47 branch locations across both Maryland and Virginia, including the Washington, D.C. and Richmond, Virginia MSAs. The merger is anticipated to close during the second quarter of this year. Neil Chriss’ Hutchin Hill Capital had 240,000 shares of Southern National Banc. of Virginia Inc. (NASDAQ:SONA) in its portfolio at the end of the third quarter.
Let’s head to the next two pages of this insider trading article, where we discuss fresh noteworthy insider selling witnessed at four companies.