New CFO of United Continental Holdings Inc. (UAL) Purchases Shares, Plus Noteworthy Insider Trading at 4 Other Companies

Past research found that corporate insiders generate superior profits relative to public investors and other stock market players even when they only trade on publicly-available information. Of course, corporate insiders tend to have more knowledge about their company’s current developments and future prospects than any of us, so they might be incidentally trading on non-public information.

There are not many why reasons corporate insiders purchase shares in their own companies, with the primary one being that these highly-informed individuals believe their companies’ shares are severely undervalued. As a general rule, corporate insiders follow the pattern of ‘buying low and selling high’, so it does make sense to keep close tabs on both insider buying and selling activity. That being said, let’s have a quick look at a set of noteworthy insider transactions reported with the SEC on Tuesday.

Through extensive research that covered the portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see the details here).

Freshly-Appointed CFO of Nation’s Third-Largest Airline by Traffic Purchases Shares

One highly-informed and influential executive at United Continental Holdings Inc. (NYSE:UAL) filed Tuesday to disclose the purchase of a sizable block of shares. Andrew C. Levy, the company’s freshly-appointed Executive Vice President and Chief Financial Officer, snapped up 15,000 shares on Friday at prices that ranged from $50.95 to $50.96 per share. After the recent purchase, the former President of low-cost carrier Allegiant Travel currently owns 20,791 shares of United Continental.

Apart from the factors that impacted all airlines in the past year or so, the third-largest airline by traffic in the United States also had to rebuild and refresh its management team and Board, partially due to pressure from two hedge fund firms. Intensifying competition over fares, a slowdown in demand for certain routes due to worries over terrorism and the Zika virus, as well as slightly higher fuel prices, put some pressure on United Continental Holdings Inc. (NYSE:UAL)’s stock and financial performance in recent months. United Continental’s shares are 10% in the red thus far in 2016. Ken Griffin’s Citadel Advisors acquired a new stake of 4.30 million shares of United Continental Holdings Inc. (NYSE:UAL) during the second quarter.

Let’s head to the next pages of this article, where we’ll discuss notable insider buying registered at two companies.

Board Member of Struggling Fashion Retailer Purchases Shares

One member of Abercrombie & Fitch Co. (NYSE:ANF)’s Board also purchased a sizable chunk of shares this past week. Board member Craig R. Stapleton acquired 10,000 shares on Thursday at a price of $17.65 per share, lifting his overall holding to 57,398 shares.

The insider purchase comes shortly after the specialty retailer released underwhelming financial results for its fiscal second quarter ended July 30. Abercrombie & Fitch Co. (NYSE:ANF), which sells casual sportswear apparel, personal care products, and accessories for men, women and children under the Abercrombie & Fitch, abercrombie kids and Hollister brands, has seen the value of its shares plunge by 37% since the beginning of 2016. Following the release of the disappointing earnings report, analysts at Stifel downgraded the fashion retailer to ‘Hold’ from ‘Buy’, saying that they “lack visibility for near-term improvement.” Stifel analysts anticipate comparable-sales in the second half of 2016 to “remain challenged despite the impact from a strengthened merchandising and design team and a significant increase in marketing spend to support the brands’ repositioning.” Jim Simons’ Renaissance Technologies owned 1.53 million shares of Abercrombie & Fitch Co. (NYSE:ANF) at the end of June.

Executive at Regional Property and Casualty Insurer Boosts Ownership Stake

A member of State Auto Financial Corp (NASDAQ:STFC)’s executive team also purchased some shares last week. Kim Burton Garland, Senior Vice President of Standard Lines, snatched up 6,356 shares on Friday at a cost of $23.63 per share. After the recent transaction, Mr. Garland currently owns 43,037 shares.

The shares of the regional property and casualty insurance holding company are up by an impressive 15% since the start of the year. State Auto Financial Corp (NASDAQ:STFC), which is engaged in writing personal, business, and specialty insurance products, recently announced a cash dividend of $0.10 per share, representing the company’s 101^st consecutive quarterly cash dividend payment since the company went public in 1991. The $0.10-per-share quarterly cash dividend yields 1.68% annually. The number of hedge funds followed by Insider Monkey with long positions in State Auto Financial fell to five from six during the second quarter of 2016. Royce & Associates, founded by Chuck Royce, was the owner of 280,367 shares of State Auto Financial Corp (NASDAQ:STFC) at the end of the second quarter.

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

Executive at Chip-Equipment Maker Offloads Shares Amid Strong Performance

An important executive at Applied Materials Inc. (NASDAQ:AMAT) offloaded a sizable block of shares last week. Omkaram Nalamasu, Senior Vice President and Chief Technology Officer, liquidated 99,491 shares on Thursday at prices that fell between $30.15 and $30.16 a share, cutting his ownership to 343,452 shares.

The chip-gear maker has seen its market capitalization increase by a whopping 60% since the start of the year. In late-August, analysts at JPMorgan reiterated their ‘Overweight’ rating on Applied Materials Inc. (NASDAQ:AMAT) and increased their December price target to $32 from $27, citing “operating-margin expansion opportunity on continued share gains, served available market (SAM) expansion and solid operational execution within a flattish semiconductor-spending environment.” The hedge fund sentiment towards the chip-equipment firm was positive in the second quarter of 2016 as well, as the number of funds in our system invested in the company rose to 47 from 39 quarter-over-quarter. John A. Levin’s Levin Capital Strategies owns 5.22 million shares of Applied Materials Inc. (NASDAQ:AMAT) as of the end of the June quarter.

Tenneco Executive Discards Shares Despite Strong Performance

One member of Tenneco Inc. (NYSE:TEN)’s executive team also offloaded a sizable block of shares this past week. Timothy E. Jackson, Executive Vice President of Technology, Strategy and Business Development, discarded 35,872 units of common stock on Thursday at prices varying from $55.17 to $55.77 per unit. Following the recent sale, Mr. Jackson currently holds an ownership stake of 42,429 shares.

The shares of the manufacturer of clean air and ride performance products and systems for light vehicle, commercial truck and off-highway applications are up by 23% year-to-date. Tenneco Inc. (NYSE:TEN) anticipates revenue growth of 7% in the third quarter of this year, beating estimated aggregate industry production growth of 5%. The third-quarter revenue growth is expected to be driven by stronger global light vehicle volumes and a strong contribution from the global aftermarket. Tenneco also anticipates sustained year-over-year adjusted margin expansion for the rest of the year. Ric Dillon’s Diamond Hill Capital reported owning around 582,000 shares of Tenneco Inc. (NYSE:TEN) through the latest round of 13F filings.

Disclosure: None