Corporate insiders are a unique class of traders, as they have access to private information about their companies that investors, analysts and journalists do not have. It is important to note that most insiders have a large portion of their wealth in the form of equity stakes, thanks to the proliferation of equity-based compensation and stock grants. Hence, personal liquidity and diversification motives are affecting the timing of their insider sales, which makes it practically impossible to interpret accurately any given insider sale.
It appears that most investors tend to ignore insider selling metrics for the reasons mentioned above, so a naïve strategy of replicating all insider sales would not prove overly successful. However, research proves there is predictable “routine” insider selling that does not convey any useful information for outside investors. Therefore, investors need to learn how to strip away these so-called “routine” insider sales, which make up a huge part of the overall insider trading activity, and compile a set of information-rich trades that contain strong predictive power. That’s the reason why Insider Monkey ignores insider selling conducted under pre-arranged trading plans or selling related to freshly-exercised stock options. Thus, the following article will lay out a list of three companies that recently registered possible information-rich insider selling.
Through extensive research, we have determined that the due diligence that the investors in our database employ, as well as their long-term focus makes them perfect targets to emulate. However, the results of our analysis have also shown that the small-cap picks of these funds can generate much better returns, with the 15 most popular small-cap stocks beating the market by an average of 95 basis points per month (read more details here).
Healthy Oil and Gas E&P Company Registers Insider Selling
Pioneer Natural Resources (NYSE:PXD) saw two executives unload shares this week, so let’s try to find out what might have triggered the recent insider selling. Timothy L. Dove, President and Chief Operating Officer, discarded 13,254 shares on Wednesday at prices ranging from $152.00 to $152.77 per share, cutting his overall holding to 271,993 shares. Jerome D. Hall Jr., Executive Vice President of Permian Operations, sold 1,600 shares on Tuesday at prices that fell between $149.45 and $150.44 per share. After the recent sale, Mr. Hall currently holds a stake of 23,428 shares.
The independent oil and gas exploration and production company has seen its market capitalization spike by 20% since the beginning of 2016. In mid-June, Pioneer Natural Resources (NYSE:PXD) announced it was acquiring roughly 28,000 net acres in the Midland Basin from Devon Energy Corp (NYSE:DVN) for $435 million. In connection with the acquisition and the much-needed recovery in crude oil prices, Pioneer anticipates to increase its horizontal rig count to 17 from 12 in the northern Spraberry/Wolfcamp by the end of 2016. The company previously said it would add five-to-ten rigs should crude oil prices recover to $50 per barrel.
The number of hedge fund vehicles followed by Insider Monkey with equity investments in the oil and gas E&P company rose to 61 from 57 during the January-to-March quarter. Those 61 asset managers accumulated almost 14% of the company’s outstanding common stock at the end of March. Stephen Mandel’s Lone Pine Capital was the owner of 1.33 million shares of Pioneer Natural Resources (NYSE:PXD) at the end of March.
The next page of this article will reveal the insider selling registered at two other companies.
Office REIT See Executive Offload Some Shares
Highwoods Properties Inc. (NYSE:HIW) saw one member of its executive team sell some shares earlier this week. Jeffrey Douglas Miller, Senior Vice President, General Counsel and Secretary, discarded 10,000 shares on Tuesday at $51.39 apiece and 2,000 shares on Wednesday for $51.80 each. Following the recent transactions, Mr. Miller continues to own 66,115 shares.
The real estate investment trust that leases and manages office buildings primarily in the best business districts of Atlanta, Greensboro, Memphis, Nashville, Orlando, Pittsburgh, Raleigh, Richmond and Tampa has seen its shares appreciate by 21% since the beginning of 2016. In fact, the shares of Highwoods Properties Inc. (NYSE:HIW) are currently trading near their 52-week high of $52.86 a share, which explains the recent insider selling at the company. The REIT owned or had an interest in 31.2 million rentable square feet of in-service properties at the end of March, as well as 1.3 million rentable square feet of properties under development. The occupancy in the REIT’s office portfolio dropped to 92.2% at the end of March from 92.6% recorded at the end of December.
The REIT paid a cash dividend of $0.425 per share for the March quarter, which equates to an annual dividend of $1.70 per share and an annual dividend yield of 3.22%. There were six money managers from our system invested in Highwood Properties at the end of the March quarter, who hoarded up 2% of the company’s outstanding shares. Greg Poole’s Echo Street Capital Management added a 141,090-share position in Highwoods Properties Inc. (NYSE:HIW) to its portfolio during the first quarter of 2016.
Residential REIT Also Registers Notable Insider Selling
Apartment Investment and Management Co (NYSE:AIV) was yet another REIT that registered noteworthy insider selling this week. Patti K. Fielding, Executive Vice President of Securities and Debt, sold 10,000 Class A shares on Wednesday at a price tag of $43.00 a share. After the recent sale, Mr. Fielding continues to own 20,923 Class A shares.
The REIT focuses on owning and managing apartment communities located in large coastal and job growth markets in the United States. At the end of March, Apartment Investment and Management Co (NYSE:AIV)’s conventional portfolio comprised 139 apartment communities with 40,376 apartment homes. Aimco’s shares have gained 10% so far in 2016. The REIT’s conventional portfolio average revenue per effective apartment home was $1,864 for the first three months of 2016, up 9% year-over-year. The increase was partially driven by the sale of apartment communities that generated average revenues per effective apartment home massively lower than those of the current portfolio. Aimco sold one conventional apartment community with 96 apartment homes during the first quarter of 2016 for $10.0 million. The REIT also agreed to acquire a 463-home apartment community under construction in Northern California for $320 million.
The hedge fund sentiment towards the residential REIT increased during the January-to-March quarter, as the number of funds from our system with stakes in Aimco rose to 18 from 13 quarter-over-quarter. Ken Griffin’s Citadel Advisors LLC owned 314,000 shares of Apartment Investment and Management Co (NYSE:AIV) at the end of the first quarter.