Seed Giant Monsanto and Mineral Development Company Witness Intriguing Insider Buying, Plus the Latest Insider Trading Developments at 3 Other Companies

Both retail investors and larger-scale investors such as hedge fund managers are armed with a wide range of tools designed to assist their financial analysis capabilities. One such tool is the evaluation of insider trading metrics or patterns. Corporate insiders tend to be completely absorbed in their company’s day-to-day operations, so they usually have first-hand knowledge about their firm’s current performance and future prospects.

On that note, if corporate insiders are buying large chunks of shares in their own company on the open market, then that could serve as a positive signal to the investment community. However, short-term-focused investors need to be aware that corporate insiders tend to have a long investment horizon, partly because of the so-called short-swing profit rule that restricts officers and insiders from making short-term profits by buying and selling shares concomitantly within a six-month period. Hence, investors need to keep in mind that insiders can afford the risk of short-term volatility when they see real bargains.

So should investors follow insiders’ security purchases? If their time horizon is somewhat aligned with that of the company’s management, then insider buying can surely serve as a good indicator. With that in mind, let’s check out a set of noteworthy insider transactions reported with the SEC on Wednesday.

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Board Member of U.S. Seeds and Herbicide Giant Buys Shares After Merger Agreement

One member of Monsanto Company (NYSE:MON)’s Board disclosed the purchase of a relatively sizeable block of shares on Wednesday. Board member Charles S. McMillan bought 3,500 shares on Monday at prices varying from $103.20 to $103.25 per share. Following the recent purchase, Mr. McMillan currently owns 64,009 Monsanto shares.

A little while ago, Bayer AG’s much-scrutinized pursuit of Monsanto Company (NYSE:MON) ended with a $66 billion-merger agreement between the two agri-giants, a deal that could represent the biggest takeover agreement this year and a record overseas acquisition for a German company. However, investors remain unconvinced that the multi-billion-dollar deal will be approved by regulators. The share price of Monsanto’s stock reflects the market’s skepticism, as Monsanto shares remain well below the offer price of $128 per share proposed by the German maker of healthcare and agricultural products. The transaction is anticipated to face tough scrutiny on the part of regulators considering that the three pending megadeals would significantly reduce the number of global players in the agribusiness sector. The shares of the U.S. seeds and herbicide giant are 3% in the green year-to-date.  Ken Fisher’s Fisher Asset Management reported owning 2,856 shares of Monsanto Company (NYSE:MON) in its 13F filing for the September quarter.

The next two pages of this article will discuss the insider trading observed at four other companies.

Board Member of Major Insurer Purchases Some Shares

One member of Chubb Ltd (NYSE:CB)’s Board of Directors filed Wednesday to disclose a purchase that occurred at the end of September. Director David H. Sidwell snapped up 830 shares on September 26 at a price tag of $124.90 each. After the not-so-distant purchase, Mr. Sidwell currently holds a total of 7,386 shares.

The former ACE Limited completed the acquisition of Chubb Corporation in mid-January, an acquisition that created a global leader in property and casualty insurance. As a result, the company changed its name from ACE Limited to Chubb Limited, and plans to adopt the Chubb name globally. Analysts at Sandler O’Neill, who have a price target of $145 on Chubb Ltd (NYSE:CB), continue to like the company’s stock potential for several reasons. First of all, both ACE and the old Chubb “had a number of franchise businesses, such as high-net-worth retail, directors and officers insurance, and accident and health insurance, that should generate higher-than-peer returns.” Second of all, the new Chubb represents “one of the largest market-cap insurers,” which implies that the company “will be a natural core holding for most large-cap portfolio managers.” The shares of the Swiss-incorporated global insurance and reinsurance organization are down by 3% in the past three months. Dan Loeb’s Third Point was the owner of 2.35 million shares of Chubb Ltd (NYSE:CB) at the end of the second quarter.

CEO of Low-Priced Mineral Development Company Piles Up Shares

The man at the helm of General Moly Inc. (NYSEMKT:GMO) purchased a few shares (to put it mildly) this week. Bruce D. Hansen, the Chief Executive Officer of General Moly since late-January of 2007, snatched up 40,000 shares on Tuesday at prices that fell in the range of $0.25 to $0.26 per share. Mr. Hansen currently owns 2.76 million shares of General Moly.

General Moly Inc. (NYSEMKT:GMO) is a U.S.-based mineral development company that plans to become the largest pure-play molybdenum producer in the world. The company’s primary asset, its 80%-interest in the Mt. Hope Project, is viewed as one of the largest and highest-grate molybdenum deposits in the world. However, the mix of depressed molybdenum pricing and legal challenges to the company’s water rights has been delaying development at the Mt. Hope Project. Nonetheless, General Moly views the long-term outlook for its business positively despite the current low prices, mainly because of limited supplies of molybdenum, the need for molybdenum in the steel industry, as well as a possible recovery in the oil and gas industry. General Moly’s shares are up by 35% this year. Ken Griffin’s Citadel Advisors added a 53,922-share stake in General Moly Inc. (NYSEMKT:GMO) to its portfolio during the June quarter.

The final page of this article will discuss the fresh insider selling observed at two companies.

Executives at Strong Performing Independent Oil and Gas Company Sell Shares

Two different insiders at Clayton Williams Energy Inc. (NYSE:CWEI) offloaded shares over the past several trading sessions. Michael L. Pollard, the company’s former Chief Financial Officer and Senior Vice President of Finance, discarded 1,100 shares for $88.50 each and 1,000 shares at $91.00 apiece on Monday, as well as 3,900 shares last Thursday at prices ranging from $86.71 to $86.94 per share. After the recent transactions, Mr. Pollard currently holds a direct ownership stake of 20,100 shares. Robert C. Lyon, Vice President of Gas Gathering and Marketing, sold 5,000 shares on Monday at prices that fell in the range of $90.22 to $90.69 per share. Mr. Lyon owns 17,044 shares following the recent sale.

The independent oil and gas company, committed to drilling developmental oil wells in two primary oil-prone regions (the Permian Basin and the Giddings Area), has seen the value of its shares advance by an impressive 202% since the start of the year. In late-August, Clayton Williams Energy Inc. (NYSE:CWEI) announced the closing of a sale of 5.05 million shares to alternative asset manager Ares Management, which generated cash proceeds of $150 million. Simultaneously, the company amended its term loan facility to wave certain restrictions that hindered the company from using proceeds from equity issuances and asset sales for debt reduction and capital expenditures. Ken Fisher’s Fisher Asset Management owns 35,364 shares of Clayton Williams Energy Inc. (NYSE:CWEI) as of September 30.

Board Members at Closed-End Investment Company Offload Shares

Two members of General American Investors Co. Inc. (NYSE:GAM)’s Board discarded some shares this week. To start with, Spencer Davidson, Chairman of Board of Directors, sold 10,619 shares on Monday at $32.59 apiece. The shares were held in various trust funds that collectively own 155,589 shares. Mr. Davidson owns an additional 961,643 shares through Hudson Partnership, of which he is the general partner. Furthermore, board member Arthur G. Altschul Jr. liquidated 1,799 shares on Monday for $32.59 each. Following the recent transactions, Mr. Altschul holds 61,369 shares.

The closed-end investment company has seen the value of its stock gain a little less than 1% this year. General American Investors Co. Inc. (NYSE:GAM) seeks to deliver long-term capital appreciation by investing in companies with above-average growth potential. The value of the company’s net assets per share stood at $37.94 on June 30, well below the stock’s closing share price of $30.82 on that day. John A. Levin’s Levin Capital Strategies was the owner of 24,869 shares of General American Investors Co. Inc. (NYSE:GAM) at the end of the June quarter.

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