Top-Tier Executives at Sprouts Farmers Market Inc. (SFM) and Two Other Companies Are Piling Up Shares; Noteworthy Insider Trading at Other Companies

In a fresh study on insider trading, several researchers from the Harvard Business School developed a framework for classifying trades by corporate insiders as either “routine” or “opportunistic” based on a certain set of attributes. One important conclusion that can be reached by examining the HBS study is that by ignoring the pool of “routine” insider transactions, one can retain a cluster of information-rich trades that contain predictive power for the future of firms.

But how can one differentiate between “routine” and “opportunistic” insider transactions? Through initial ownership, stock grants, and other market transactions, corporate insiders’ holdings of company stock usually comprise a high portion of their entire wealth. As a result, personal liquidity or diversification needs are usually affecting the timing of their insider transactions, which makes it extremely difficult for outsiders to interpret whether a specific transaction is informative or not. By stripping away insider transactions conducted under pre-arranged trading plans or transactions related to stock options, the odds of stumbling upon “routine” insider trades lowers to a great extent. Leaving this discussion aside, let’s have a closer look at a pool of noteworthy insider transactions reported with the U.S. SEC on Tuesday.

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Two Insiders at Transitioning REIT Purchase Shares

Two different insiders at Investors Real Estate Trust (NYSE:IRET) purchased shares of company stock earlier this week. To begin with, Mark O. Decker Jr., President and Chief Investment Officer, snatched up 45,900 shares on Tuesday at a price tag of $5.87 each, boosting his overall ownership to 89,449 shares. Linda J. Hall Keller, independent member of the company’s Trustees Board, filed Tuesday to disclose the purchase of 5,000 shares for $5.89 each. After the recent purchase, Ms. Hall currently holds an ownership stake of 34,907 shares.

The insider buying comes after the equity real estate investment trust that owns and operates multifamily, healthcare and other properties located mainly in the upper Midwest states of Minnesota and North Dakota has seen the value of its shares plunge by 13% in the past five trading sessions. The plunge was triggered by the release of Investors Real Estate Trust (NYSE:IRET)’s financial and operating results for the quarter that ended July 31. The REIT’s recently-announced pending sale of 26 senior housing assets for $236 million represents an exit from this line of business, a move that is part of the company’s strategy to transform into a pure-play multifamily REIT. IRET’s shares are 17% in the red thus far in 2016. Jim Simons’ Renaissance Technologies LLC was the owner of around 2.12 million shares of Investors Real Estate Trust (NYSE:IRET) at the end of June.

The next two pages of this article will discuss another set of notable insider transactions reported on Tuesday.

CFO of Struggling Natural Foods Retailer Buys Some Shares

A well-informed and influential member of Sprouts Farmers Market Inc. (NASDAQ:SFM)’s executive team also piled up some shares this week. Bradley Lukow, who joined the company as Chief Financial Officer in early March of 2016, bought 10,000 shares on Monday at prices varying from $19.41 to $19.48 per share. Following the transaction, Mr. Lukow currently owns a stake of 38,525 shares, which includes 18,525 restricted stock units.

Sprouts Farmers Market Inc. (NASDAQ:SFM), one of the largest specialty retailers of fresh, natural and organic food in the United States, has seen its market cap drop by 27% since the beginning of the year. The natural foods retailer recently revised the third-quarter and full-year guidance downward because of a “prolonged deflationary environment, competitive landscape and industry dynamics.” Sprouts Farmers Market anticipates comparable store sales growth for the third quarter ending October 2 to be approximately flat, as compared to the previous forecast of growth in the range of 3%-to-4%. Adam Weiss’ Stillwater Investment Management reported ownership of 632,300 shares of Sprouts Farmers Market Inc. (NASDAQ:SFM) through the latest round of 13Fs.

CEO of High-Flying Producer of Distilled Spirits Purchases Shares

The man in charge of MGP Ingredients Inc. (NASDAQ:MGPI) bought some shares this past week. Augustus C. Griffin, the Chief Executive Officer and President of the company since late July 2014, snapped up 3,000 shares on Friday at prices that fell between $38.25 and $38.48 per share. After the recent purchase, Mr. Griffin currently holds a stake of 101,460 shares.

The shares of the producer and supplier of premium distilled spirits and specialty wheat proteins and starches have advanced an impressive 49% since the start of the year, but the company’s CEO keeps buying shares; this is great news for the current shareholders of MGP Ingredients. In early August, MGP Ingredients Inc. (NASDAQ:MGPI)’s boardroom approved the initiation of a quarterly dividend policy by announcing a quarterly dividend of $0.02 per share. This step shows the company’s confidence in its ability to deliver positive cash flow streams ahead. The quarterly dividend yields 0.21% annually. There were seven hedge funds followed by Insider Monkey with long positions in MGPI at the end of the second quarter, as compared to five recorded at the end of the first quarter. In the latest round of 13F filings, Mark Broach’s Manatuck Hill Partners reported owning 162,600 shares of MGP Ingredients Inc. (NASDAQ:MGPI).

The final page of this article will discuss noteworthy insider selling registered at two other companies.

Executive of Paper and Packaging Company Sells Shares Amid Takeover Speculations

According to our insider trading database, the insider buying at International Paper Co (NYSE:IP) has been mute over the past several years, whereas the volume of insider selling has been on a rise as of late. William P. Hoel, Senior Vice President of Container for the Americas, discarded 20,000 shares on Tuesday at prices ranging from $48.11 to $48.19 per share, cutting his overall holding to 157,372 shares.

The paper and packaging company has seen its market value jump by 26% since the beginning of the year, partially due to speculations around a prospective takeover. Several media reports speculated that privately-held Koch Industries could represent a possible acquirer of International Paper Co (NYSE:IP). The company reported net sales of $5.3 billion for the second quarter, as compared to $5.1 billion posted in the first quarter of 2016 and $5.7 billion in the second quarter of 2015. The number of smart money investors from our system with stakes in International Paper fell to 20 from 22 during the April-to-June period. Adage Capital Management, founded by Phillip Gross and Robert Atchinson, has 614,492 shares of International Paper Co (NYSE:IP) among its holdings as of June 30.

Executive at Growing Provider of Financial Services Technology Offloads Shares

An influential member of Fiserv Inc. (NASDAQ:FISV)’s executive team also offloaded some shares this week. Rahul Gupta, Group President of the Billing and Payments Group at Fiserv, sold 15,225 shares on Monday at prices varying from $101.00 to $101.12 per share. After the recent purchase, Mr. Gupta currently holds a stake of 66,129 shares.

The shares of the provider of financial services technology are up by 8% so far in 2016. During the first quarter of the year, Fiserv Inc. (NASDAQ:FISV) completed the acquisition of two businesses for around $265 million. In January, the company acquired Hewlett Packard Enterprise Co (NYSE:HPE)’s Convenience Pay Services business, which allows providers to accept electronic payments from their customers through multiple channels. In March, Fiserv also acquired certain assets of ACI Worldwide Inc. (NASDAQ:ACIW)’s Community Financial Services business, which enabled the acquirer to enhance its portfolio of digital banking and payments solutions. David Harding’s Winton Capital Management owns 312,032 shares of Fiserv Inc. (NASDAQ:FISV) as of the end of the second quarter.

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