United Parcel Service Inc. (UPS) and EnerSys (ENS) Witness Insider Selling, While 3 Companies Showcase Insider Buying

Retail investors may find it quite hard to find securities that are trading at reasonable prices or valuations that allow for the possibility of generating strong returns. Hedge fund behemoths and multi-billion-dollar asset managers have large-sized research teams that constantly look for investing opportunities among the pool of thousands of small-, mid- and large-cap stocks on the market today. But how can retail investors find reasonably-priced or undervalued stocks? As a general rule, heavy insider buying can point to some undervalued securities that may be poised for a turnaround, so it’s worthwhile to examine insider trading metrics as part of a broader stock analysis process. Insider Monkey processed a batch of Form 4 filings submitted with the SEC on Thursday and compiled a list of five companies that registered the most noteworthy insider trading transactions.

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).

This Heart Valve Manufacturer Saw Newly-Appointed Board Member Buy More Shares

Steven R. Loranger, appointed to Edwards Lifesciences Corp (NYSE:EW)’s Board of Directors in mid-March, purchased a stake of 5,000 shares at prices that ranged from $101.00 to $101.10 per share, which is held entirely by the Steven R. Loranger Revocable Trust. Mr. Loranger also holds a direct ownership stake of 1,941 shares.

The shares of the heart valve manufacturer have advanced by 147% in the past two years and are up by 25% thus far in 2016, so one should approach the purchase made by the newly-appointed Board member with caution. Put differently, the insider buying activity registered at Edwards Lifesciences Corp (NYSE:EW) may not be the type of buying investors should look for, as Mr. Loranger’s purchase could simply be aimed at assuring the market that his interests are fully aligned with those of the company’s shareholders. Just recently, analysts at Canaccord raised their price target on Edwards Lifesciences to $132 and reiterated their ‘Buy’ rating on the stock, citing “material earnings upside, namely in 2017”. Columbus Circle Investors, managed by Clifford G. Fox, owns 2.18 million shares of Edwards Lifesciences Corp (NYSE:EW) as of March 31.

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

Longtime Board Member of This REIT Buys Some Shares

Duane A. Nelles, Board member of American Assets Trust Inc. (NYSE:AAT) since the company went public in January 2011, snapped up 7,000 shares on Thursday at $39.76 apiece. The newly-acquired block of shares are held by the Nelles Intervivos Trust, which currently holds 73,855 shares of AAT. Mr. Nelles also holds a direct ownership stake of 1,678 shares.

American Assets Trust Inc. (NYSE:AAT) operates as a real estate investment trust (REIT) focused on acquiring and owning retail, office, multifamily and mixed-use properties in a number of high-barrier-to-entry markets. The REIT’s asset portfolio includes ten retail shopping centers, seven office properties, a mixed-use property that consists of a 369-room hotel and a retail shopping center, and five multi-family properties. AAT’s total property revenue for the first quarter of 2016 was $70.73 million, up from $66.04 million recorded for the same quarter of 2015. AAT shares are nearly 5% in the green year-to-date. Jeffrey Furber’s AEW Capital Management upped its stake in American Assets Trust Inc. (NYSE:AAT) by 29% during the March quarter, to 1.99 million shares.

One of Bankwell Financial Group’s Directors Purchases Shares

Bankwell Financial Group Inc. (NASDAQ:BWFG)’s Director Carl M. Porto, who joined the company’s Board in July 2015, acquired a new stake of 6,326 shares on Wednesday at a price of $21.79 per share.

The holding company for Bankwell Bank has seen its market value gain 9% since the start of the year. Bankwell Financial Group Inc. (NASDAQ:BWFG) completed its initial public offering in May 2014 by selling 2.70 million shares at an IPO price of $18.00. Meanwhile, the bank’s shares are currently changing hands 20% above the aforementioned IPO price. The bank reported net income of $3.0 million, or $0.40 per diluted share, for the first three months of 2016, up from $1.8 million, or $0.26 per share, posted a year earlier. A mere four hedge funds tracked by Insider Monkey were invested in the bank at the end of the March quarter, with them amassing nearly 12% of its outstanding shares. Jim Simons’ Renaissance Technologies LLC owns 50,000 shares of Bankwell Financial Group Inc. (NASDAQ:BWFG) as of the end of the first quarter.

This Battery Maker Had Two Insiders Unload Shares This Week

EnerSys (NYSE:ENS) had two corporate insiders offload shares earlier this week. To start with, Jeffrey W. Long, President of Americas at EnerSys, discarded 2,500 shares on Wednesday at prices varying from $58.74 to $59.04 per share, cutting his overall holding to 58,628 shares. Moreover, Nonexecutive Chairman John D. Craig, who served as the Chief Executive Officer of EnerSys from November 2000 to the end of March of 2016, unloaded 60,000 shares on Tuesday and 7,800 shares on Wednesday at prices ranging from $58.60 to $59.69 per share. Following the recent sales, Mr. Craig continues to own 191,292 shares.

The shares of the world’s largest manufacturer and distributor of industrial batteries are up by 79% in the past five years and by 6% in 2016, which partly explains the executives’ freshly-completed sales. EnerSys (NYSE:ENS) posted net sales of $2.32 billion for its fiscal year 2016 that ended March 31, down by 8% year-over-year due to foreign currency headwinds and lower organic volume. Royce & Associates, founded by Chuck Royce, reported owning 757,500 shares of EnerSys (NYSE:ENS) in its latest quarterly 13F filing.

This Delivery Company’s Retiring Executive Sells Some Shares

Chief Information and Global Business Officer of United Parcel Service Inc. (NYSE:UPS), David A. Barnes, sold 11,711 shares on Wednesday at prices that fell between $102.45 to $102.51 per share, cutting his ownership to 150,746 shares. However, the insider sale does not seem surprising considering that Mr. Barnes has elected to retire after 38 years with the company.

The world’s largest air delivery and freight services company has seen its shares gain 7% since the beginning of the year. United Parcel Service Inc. (NYSE:UPS)’s revenue for the first quarter of 2016 increased to $14.42 billion from $13.98 billion recorded a year prior. At the same time, the company’s total volume in the U.S market rose by 4.5% year-over-year due to sustained growth in e-commerce and one additional operating day. The number of asset managers that we track with stakes in UPS dropped to 35 from 36 during the first quarter. Adage Capital Management, founded by Phillip Gross and Robert Atchinson, has 930,400 shares of United Parcel Service Inc. (NYSE:UPS) in its portfolio at the end of March.

Disclosure: None