Massive Cluster of Insider Selling at Western Alliance, Executives at Insulin Pump Maker Buy Shares Amid Harmful Allegations Against the Company, Plus Other Insider Trading

In a rather recent study on insider trading, several researchers from top-tier U.S. universities split insider trading into two groups: routine insider trading activity that is not informative for the future of firms; and information-rich insider trading activity that contains strong predictive power. The so-called routine insider selling can be driven diversification or liquidity reasons. For instance, insider trading watchers may have noticed that Bill Gates trades in a pre-announced, routine fashion and his sales do not necessarily suggest bad times ahead for Microsoft Corporation (NASDAQ:MSFT).

While most insider selling could be viewed as routine, only a small portion of the overall insider buying activity can be considered routine. For instance, freshly-appointed Board members and executives buying shares to meet stock ownership guidelines put in place by their companies represents routine insider buying. Going back to the study mentioned above, the researchers found that abnormal returns associated with routine trades were essentially zero, whereas information-rich insider transactions, also called “opportunistic”, yielded value-weighted average returns of 82 basis points per month. That said, let’s have a look at a set of noteworthy insider transactions reported with the SEC on Monday.

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Executives at Insulin Pump Maker Buy Shares After Emergence of Harmful Allegations Against the Company

Let’s begin our discussion by looking into the insider buying activity at Insulet Corporation (NASDAQ:PODD), where two high-ranked executives purchased shares this past week. To start with, Chairman and Chief Executive Officer Patrick J. Sullivan bought 40,000 shares on Friday at prices varying prices in the range of $33.08 to $34.00 per share. After the recent purchase, Mr. Sullivan currently owns an aggregate of 261,544 shares. Bradley A. Thomas, Executive Vice President of Human Resources and Organizational Development, purchased 3,100 shares a day earlier at a weighted average price of $32.45 per share, a purchase that lifted his overall holding to 54,983 shares.

Insulet Corporation (NASDAQ:PODD), which develops, manufactures and sells an easy-to-use continuous insulin delivery system for people with insulin-dependent diabetes, has seen the value of its shares fall by 7% since the start of the year. The stock was recently hit by allegations that the insulin pump maker had previously covered up patient deaths related to its Omnipod insulin pump. Research house SkyTides, which revealed the allegations several days ago, also believes that a new wave of insulin pump technology will disrupt the industry and likely hurt Insulet’s top-line growth. Therefore, it appears that Insulet’s CEO wanted to rebuff the allegations by buying more shares on the open market. David Greenspan’s Slate Path Capital was the owner of 2.72 million shares of Insulet Corporation (NASDAQ:PODD) at the end of the third quarter.

The next two pages of this article will discuss fresh insider buying and selling observed at four other companies.

Insiders at Promising Player in the Field of Synthetic Biology Purchase Shares

Two insiders at Intrexon Corp (NYSE:XON) also piled up some shares last week. Fred Hassan, appointed to the company’s Board of Directors in late June, acquired a new stake of 6,900 shares on Thursday at prices varying from $28.86 to $29.14 per share. Nir Nimrodi, Senior Vice President of Corporate Development, also snapped up a stake of 4,000 shares last Tuesday at prices that fell between $26.07 and $26.15 per share. The newly-acquired stake is held indirectly by the Nimrodi Family Trust.

Although the shares of the engineered biology conglomerate are down a little less than 1% thus far in 2016, the company appears to have a strong portfolio of products that will drive growth in the foreseeable future. In late October, Intrexon Corp (NYSE:XON) launched a laboratory in Brazil capable of producing 60 million genetically-modified mosquitoes a week that could protect up to 3 million locals from mosquito-borne diseases such as Zika and dengue. A portion of the new facility’s production capacity will likely be used to support an ongoing program to suppress Aedes aegypti – the mosquito that carries the Zika virus. Ongoing trails in Brazil, Panama and the Cayman Islands have demonstrated that the genetically-modified mosquitoes, called Friendly Aedes, can reduce localized Aedes aegypti populations by more than 90%. Intrexon has lost some appeal within the hedge fund industry, as the number of funds from our database with stakes in the company fell to 10 from 16 during the third quarter. Iridian Asset Management, founded by David Cohen and Harold Levy, reported ownership of 3.99 million shares of Intrexon Corp (NYSE:XON) through the last round of 13Fs.

CEO of Struggling Chinese Manufacturer of EV Parts Buys Shares

The man in charge of Kandi Technologies Group Inc. (NASDAQ:KNDI) also bought some shares last week. President and CEO Hu Xiaoming filed Monday to disclose the purchase of 34,000 shares for $4.75 each and 28,251 shares at $4.67 apiece, all of which are held indirectly by Excel Vantage Group. Mr. Xiaoming holds an indirect ownership stake of 12.23 million shares, as well as owns 1.14 million shares directly.

The producer and manufacturer of electrical vehicle products, electrical vehicle parts and off road vehicles in China has seen its market capitalization fall by 52% since the start of the year. Kandi Technologies Group Inc. (NASDAQ:KNDI)’s third-quarter total revenue decreased by a disturbing 87.4% year-over-year to $6.4 million, after a Chinese government decision to withhold subsidies pending an investigation on all the EV manufactures. The delay in subsidy payment heavily impacted the company’s production and sales, causing a massive drop in its EV parts sales. Five Chinese EV companies have already been removed from the list of companies eligible for government subsidies, with the investigation still continuing. Ken Griffin’s Citadel Advisors LLC had 48,980 shares of Kandi Technologies Group Inc. (NASDAQ:KNDI) in its portfolio at the end of September.

The final page of this article will focus on fresh insider selling observed at two other companies.

Massive Cluster of Insider Selling at Western Alliance

Four different insiders, including the two highest-ranked executives, at Western Alliance Bancorporation (NYSE:WAL) discarded shares last week. To begin with, Chairman and CEO Robert Gary Sarver sold 100,000 shares on Thursday at prices ranging from $47.56 to $46.87 per share, cutting his direct ownership stake to 955,075 shares. Dale M. Gibbons, Chief Financial Officer and Executive Vice President, offloaded 5,000 shares on the same day at a price tag of $47.70 per share, a sale that trimmed his holding to 144,434 shares. Bruce D. Beach, a director of Western Alliance since April 2005, sold 7,377 units of common stock on Thursday at prices that fell in the range of $47.59 to $47.81 per unit, all of which were held indirectly in a revocable trust. Mr. Beach currently holds an indirect ownership stake of 34,211 shares following the recent sale. Board member Steven J. Hilton liquidated 20,000 shares on Wednesday at an average price of $46.69 per share, reducing his indirect ownership stake to 134,991 shares held via the Steven J. Hilton Family Trust. Mr. Hilton also owns 31,960 shares directly.

The shares of the Arizona-based bank holding company are trading near their 52-week high of $48.30, after gaining 34% so far in 2016. Therefore, the recent spike in insider selling should not surprise the investment community at all. Western Alliance Bancorporation (NYSE:WAL) reported interest income of $184.7 million for the third quarter, which increased by 26.3% year-over-year. The increase was mainly driven by a $2.33 billion increase in the average loan balance, as well as an increase in the average yield on loans. The company’s loan balance was mainly boosted by the acquisition of the $1.28 billion domestic select-service franchise loan portfolio from General Electric Company (NYSE:GE), as part of GE’s strategy to divest its finance arm. Robert B. Gillam’s McKinley Capital Management owns approximately 597,000 shares of Western Alliance Bancorporation (NYSE:WAL) as of September 30.

Executives at Plains All American Pipeline Discard Shares

Two members of Plains All American Pipeline L.P. (NYSE:PAA)’s executive team unloaded shares last week. John P. von Berg, Executive Vice President of Commercial Activities, discarded one block of 86,660 shares and another one of 29,024 shares on Thursday at prices that fell between $32.30 and $33.66 per share. Mr. Berg currently owns a total of 6,675 shares after the recent transactions. Chief Financial Officer and Executive Vice President Al Swanson liquidated 65,000 shares on Thursday at prices varying from $33.30 to $33.66 per share, cutting his holding to 100,998 shares.

While the future of energy master limited partnerships (MLPs) looks brighter at the moment with increased prospects for infrastructure growth after Donald Trump’s election victory, insiders at Plains All American Pipeline L.P. (NYSE:PAA) are offloading shares. The company owns and operates midstream energy infrastructure and provides logistics services for crude oil, NGL, natural gas and refined products. The shares of Plains All American Pipeline are 35% in the green this year. Richard Driehaus’ Driehaus Capital added a stake of around 204,000 shares in Plains All American Pipeline L.P. (NYSE:PAA) to its pool of holding during the third quarter.

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