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These Companies’ Insiders Sell Shares Ahead of Likely Fed Rate Hike

The central bank of the United States will wrap up its two-day policy meeting on Wednesday, and futures contracts assign an 81% likelihood that the Fed will raise interest rates this Wednesday for the first time in almost a decade. The potential divergence between interest rates in the nation and other countries, including the European Union member countries and China, will most likely strengthen the U.S. dollar even further. Hence, U.S.-listed multinational companies that have great exposure to global economies might feel the impact of a rising interest rate environment. Higher rates may lure global investors to channel more capital into the soon-to-be more attractive asset classes in the United States. Moving on to the underlying purpose of this article, some companies’ corporate insiders have been cashing out their holdings lately, which could scare away current and potential investors in those companies. The Insider Monkey team identified three companies with noteworthy insider sales, so this article will discuss those trades and the performance of the companies in question.

Prior to discussing the insider trading activity, let’s make you familiar with what Insider Monkey does besides providing high-quality articles. At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read more details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning 102% and beating the market by more than 53 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks.

ePlus Inc. (NASDAQ:PLUS) registered a high volume of insider selling in the past several days. Director and Senior Vice President of Business Development Bruce M. Bowen reported the sell-off of 10,000 shares at a weighted average price of $96.31 per unit, all of which were held through Bowen Holdings LLC. After the recent sale, Bowen Holdings owns 40,300 shares. Bruce Bowen also holds a direct ownership stake of 4,037 shares. Furthermore, Director C. Thomas Faulders III sold 2,500 shares on the same day at prices that ranged from $95.36-to-$96.68 per share, trimming his overall holding to 14,520 shares. Last but not least, Director Eric D. Hovde reported selling 7,860 shares at prices in the range of $92.85 to $98.66 per share, which were held via Financial Institution Partners III. Eric Hovde is the Chief Executive Officer of Hovde Capital Advisors, which serves as the general partner to FIP III. Following the recent sale, FIP III owns a stake of 38,084 shares, while the Director holds an additional direct ownership stake of 162,185 shares. The integrator of technology solutions for information technology lifecycle management reported net sales of $606.2 million for the six months that ended September 30, which were up 6.4% or $36.4 million year-on-year. Its diluted earnings per share for the same period totaled $3.35, increasing by 17.1% year-over-year. Meanwhile, shares of ePlus Inc. (NASDAQ:PLUS) are up by 31% year-to-date, but they are still trading at a relatively cheap trailing price-to-earnings ratio of 14.85 (the ratio for the S&P 500 totals 22.73). Royce & Associates, founded by Chuck Royce, reported owning 152,476 shares in ePlus Inc. (NASDAQ:PLUS) in the last round of 13F filings.

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The second page of this daily insider trading article reveals the insider sales reported at American Airlines Group Inc. (NASDAQ:AAL) and AMN Healthcare Services Inc. (NYSE:AHS).

American Airlines Group Inc. (NASDAQ:AAL) is another company that saw an executive selling big this past week. Executive Vice President and Chief Information Officer Maya Leibman sold 19,778 shares on Friday at a weighted average price of $42.75, while an additional 14,294 shares were withheld to cover taxes related to the vesting of restricted stock units. After the recent transactions, the CIO currently holds a stake of 362,440 shares. The U.S. airline industry revenues decreased for the third quarter of 2015 relative to the same period of 2014, while capacity (measured by available seat miles) increased. Meanwhile, jet fuel prices are strongly correlated with the price of Brent crude oil, which was roughly 51% lower in the third quarter of this year relative to the third quarter of 2014. American Airlines Group reported operating revenues of $10.7 billion for the third quarter, down $433 million or 3.9% year-on-year. Nevertheless, the airline’s net income increased to $1.7 billion from $942 million year-over-year, thanks to lower fuel costs. Even so, the shares of American Airlines have declined by 20% thus far in 2015 and are trading at a very appealing trailing P/E ratio of 6.07. The number of smart money investors with positions in the airline company decreased to 77 from 85 during the third quarter. Cliff Asness’ AQR Capital Management holds a 2.18 million-share position in American Airlines Group Inc. (NASDAQ:AAL) as of the end of the third quarter.

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Let’s refocus our attention on the insider selling activity registered at AMN Healthcare Services Inc. (NYSE:AHS). Chairman Douglas D. Wheat sold out his entire 27,303-share stake on Friday at prices that ranged from $29.74-to-$30.02 per share. The shares of the provider of healthcare workforce solutions and staffing services to the healthcare industry have advanced by 49% in 2015 and by 365% over the past five years, so it is no wonder why insiders are cashing out on the company. The healthcare staffing environment continued to be quite strong in 2015, driving substantial revenue growth for the company. The company’s revenue for the nine months that ended September 30 totaled $1.06 billion, up from $756.4 million reported a year ago. Its net revenue increased to $61.7 million from $23.3 million year-over-year. AMN Healthcare’s nurse and allied healthcare staffing segment revenue represented roughly 67% of the company’s consolidated revenue for the first nine months of 2015. A total of 23 hedge funds from our database had positions in the company at the end of the third quarter (amassing 8.90% of the company’s outstanding common stock), as compared with 25 reported at the end of the second quarter. Columbus Circle Investors, managed by Clifford G. Fox, owns 742,147 shares of AMN Healthcare Services Inc. (NYSE:AHS) as of September 30.

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Disclosure: None

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