Nike Inc. (NKE), Resonant Inc. (RESN) and Angie’s List Inc. (ANGI) Witness Insider Buying

After several weeks of extremely sluggish insider buying, the insider trading activity on the buy side has finally started to show signs of life. Considering the bunch of Form 4 filings disclosing insider buying submitted with the SEC on Tuesday, one can expect this week’s dollar volume of insider buying to increase significantly relative to the volume registered last week. As the saying goes, corporate insiders buy shares in their own companies for one straightforward reason: they believe those shares are poised to gain value in the foreseeable future. Past research has shown that non-insiders can beat broader market benchmarks by mimicking insiders’ purchases, which is the main reason Insider Monkey keeps tabs on insider buying activity. Insider Monkey analyzed numerous Form 4 filings submitted with the SEC this week and identified three companies with notable insider buying, of which one registered a cluster of insider buying.

Academic research has shown that certain insider purchases historically outperformed the market by an average of seven percentage points per year. This effect is more pronounced in small-cap stocks. Another exception is the small-cap stock picks of hedge funds. Our research has shown that imitating the 15 most popular small-cap stocks among hedge funds outperformed the market by nearly a percentage point per month between 1999 and 2012 (read more details here).

Nike Had Board Member Buy Some Shares Last Week

Let’s kick off our discussion by looking into the insider buying at Nike Inc. (NYSE:NKE), which had not witnessed any insiders buy shares for quite some time until last week. John C. Lechleiter, who joined Nike’s Board of Directors in June 2009, purchased 1,000 Class B shares on Thursday at $60.18 apiece. After the recent purchase, the Board member currently owns 22,682 Class B shares.

The shares of the world’s largest athletic apparel manufacturer have gained 19% in the past 12 months, but are down 4% since the beginning of 2016. Although Nike shares are not doing great thus far in 2016, there is good reason to believe that the stock can reach a new all-time high by the end of the year. Nike Inc. (NYSE:NKE)’s futures orders for NIKE Brand footwear and apparel scheduled for delivery from March through July, ahead of the Rio 2016 Olympics and the UEFA European Football Championship, totaled $12.6 billion and were 17% higher excluding currency changes than the orders registered in the same period of 2015. More importantly, futures orders in China increased 36% year-on-year, after increasing at a rate of 34% in the same period of the prior year. The increase in demand for Nike products in the world’s second-largest economy can be attributed to the fast-growing health and fitness industry in the country, with Direct-to-Consumer (DTC) revenues increasing 47% year-on-year in the first nine months of fiscal 2016 that ended February 29.

Shares of Nike are currently changing hands at around 24.2-times expected earnings, significantly above the forward PE multiple of 17.9 for the Consumer Discretionary sector. David Keidan’s Buckingham Capital Management upped its stake in Nike Inc. (NYSE:NKE) by 17% during the March quarter to 289,925 shares.

The next two pages of this article will discuss the insider buying witnessed at Resonant Inc. (NASDAQ:RESN) and Angie’s List Inc. (NASDAQ:ANGI).

Directors and Executives at Resonant Participated in Private Offering of Shares and Warrants

Resonant Inc. (NASDAQ:RESN) witnessed a massive cluster of insider buying this week, which involved Board members, top-tier executives and large shareholders. It is worth noting that all insiders participated in a private placement of units, with each unit consisting of one share of Resonant’s common stock and one warrant to purchase one share at an exercise price of $2.86 per share.

To start with, President and Chief Commercial Officer George B. Holmes bought 8,300 units on Monday for $2.985 each, as well as received 7,917 shares of freshly-vested restricted stock units. After these transactions, Mr. Holmes currently owns 43,217 shares of common stock, along with warrants to purchase an additional 8,300 shares. Director Richard Kornfeld snapped up 20,000 units at $2.985 apiece, increasing his ownership to 44,000 shares. Furthermore, Chief Executive Officer and Co-founder of Resonant, Terry Lingren, bought a mere 5,000 units on Monday, which lifted his overall holding to 383,594 shares. An additional 5,000 units were purchased by Chief Operating Officer Neal Fenzi, who currently owns 377,717 shares. John E. Major, Chairman of the Board, snapped up 33,500 units for $2.985 each, after which he owns 57,500 shares. Last but not least, Chief Technology Officer Robert B. Hammond bought 5,000 units on Monday, which lifted his ownership to 377,717 shares.

Resonant is a late-stage development company that focuses on creating innovative filter designs for radio frequency front-ends for the mobile device industry, so the $6 million gross proceeds raised in the private offering will channeled into its development efforts and business development activities, as well as into covering general and administrative expenses. While the aforementioned insider purchases do not necessarily suggest that Resonant’s shares are undervalued, insiders’ participation in the private offering shows their confidence in the future potential of the company. The shares of the company are 27% in the green year-to-date. James Dondero’s Highland Capital Management acquired a new stake of 10,439 shares of Resonant Inc. (NASDAQ:RESN) during the December quarter.

Angie’s List Had One Director Buy Shares Amid Freemium Offering Implementation

Angie’s List Inc. (NASDAQ:ANGI) saw one Board member buy a sizable block of shares earlier this week. Director Michael S. Maurer purchased 12,000 units of common stock on Monday at prices varying from $8.25 to $8.30 per share, boosting his ownership to 173,211 shares. The shares of the operator of a national local services consumer review service and marketplace are trading significantly above their 52-week low of $3.73 touched in July 2015, but they continue to trade significantly below their all-time high of nearly $30 in the summer of 2013.

The company currently generates revenue from both service providers and members, but the share of membership revenue as a percentage of revenue has been on a decline and is anticipated to keep declining as the company recently introduced a free membership tier for consumers for the first time. The newly-launched freemium offering has shown promising results, with logins, searches, contract value and reviews increasing relative to those metrics registered in the company’s control markets. Member additions and total engagement on the online review website have increased considerably since the launch of the freemium offering.

Equity research, sales and trading firm MKM Partners LLC believes that Angie’s List “could be a $30 to $38 stock in three years with a lengthy growth cycle ahead as the leading and perhaps only digital marketplace for home services” should be management be successful. The company introduced the so-called long-term profitably growth plan in early 2016, which will remove the ratings and review paywall and introduce tiers of freemium and premium services, but some investors fear this change would not make Angie’s List more competitive. Eric Semler’s TCS Capital Management had 5.92 million shares of Angie’s List Inc. (NASDAQ:ANGI) in its portfolio at the end of 2015.

Disclosure: None