As a general rule, there are numerous reasons corporate insiders sell shares of their own companies. For instance, insiders may seek to diversify their holdings, buy a new house, or take an expensive vacation. This makes it practically impossible to know the actual reason behind any particular insider sale unless insiders decide to specify the motives of their sales in the Form 4 filings submitted with the SEC. Therefore, securities sales completed by Board members and executives are not viewed as powerful indicators as insider purchases.
Nonetheless, corporate insiders are financially-educated individuals, so they would not be as likely to sell shares if they anticipated positive catalysts that could drive their company’s share price up in the near-term. Hence, heavy insider selling, particularly in the form of clusters of selling, may serve as an indicator that insiders believe the share price of their company’s stock is approaching or exceeding its “fair” value. After processing numerous Form 4 filings submitted with the SEC on Monday, Insider Monkey compiled a list of five companies that had noteworthy insider trading.
At Insider Monkey, we track around 750 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details).
Two Insiders at Healthcare-Focused REIT Buy Shares on Stock Price Weakness
Let’s begin our discussion by analyzing the insider buying activity at Omega Healthcare Investors Inc. (NYSE:OHI), where two corporate insiders piled up more shares last week. To start with, Chief Executive Officer C. Taylor Pickett bought 21,800 shares on Friday at a price tag of $29.26 each, with 4,000 shares of those shares being held in a family trust that currently owns 8,200 shares. Mr. Pickett holds a direct ownership stake of 276,261 following the recent purchase.
The shares of the largest owner of post-acute care facilities in the United States have dipped by 15% in the past three months, which likely explains the recent spike in insider buying at the company. Omega Healthcare Investors Inc. (NYSE:OHI) has increased its quarterly dividend for 17 consecutive quarters, with the current dividend of $0.61 per share yielding an attractive 8.01% annually. The real estate investment trust that invests in healthcare-related real estate properties located in the United States and the United Kingdom reported net income of $82.1 million on operating revenues of $224.6 million for the third quarter, as compared to net income of $83.3 million on operating revenues of $202.0 million recorded a year ago. Jim Simons’ Renaissance Technologies LLC added a 599,930-share stake in Omega Healthcare Investors Inc. (NYSE:OHI) to its portfolio during the third quarter.
In the next two pages of this article, we will discuss several insider purchases and sales reported with the SEC on Monday.