Most market participants usually perceive insider buying much more informative and important than insider selling, and rightly so. While directors and executives are almost always buying shares in their own companies because they anticipate better times ahead, insiders can sell shares for a wide array of reasons that may not be related to their companies’ current developments or future prospects. Insider trading watchers should keep in mind that insiders could be selling shares simply to raise capital for personal needs, but that does not necessarily mean all insider sales are not informative. Clusters of insider selling, which usually involves three or more insiders, may serve as a strong signal that a company’s market value is approaching or even exceeding its so-called fair market value. Having this in mind, the following article will discuss several noteworthy insider purchases and sales disclosed with the SEC on Monday.
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).
The Man in Charge of This Struggling Crude Oil Refiner Keeps Buying Shares
Western Refining Inc. (NYSE:WNR)’s President and Chief Executive Officer, Jeff A. Stevens, purchased 75,000 shares on Thursday, 25,000 shares on Friday and 50,000 shares on Monday at prices that ranged from $20.75 to $23.00 per share. Following the recent purchases, Mr. Stevens currently owns a stake of 3.45 million shares.
The shares of the independent crude oil refiner and marketer of refined products are down a massive 41% since the beginning of 2016, partly owing to a disappointing first-quarter earnings report. Western Refining Inc. (NYSE:WNR)’s top- and bottom-line figures missed analysts’ estimates by a wide margin mainly because of lower-than-normal gasoline margins. Nonetheless, the management claims the second quarter is showing promising signs of improvement as gasoline demand continues to be strong and southwest U.S. gasoline margins continue their recovery from their February lows. Grisanti Brown & Partners, managed by Christopher C. Grisanti, trimmed its stake in Western Refining Inc. (NYSE:WNR) by 12% during the March quarter to approximately 228,000 shares.
Let’s head to the next two pages of this article, where we will discuss several insider purchases and sales registered at four companies.