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Voluminous Insider Selling at Apple Inc. (AAPL) and Flowserve Corp (FLS), Plus Insider Buying at WBA and Others

Plenty of research concludes that securities purchases on the part of corporate insiders beat broader market gauges by a wide margin on aggregate. It would be safe to claim that most insider purchases represent a bullish signal to the investment community. Meanwhile, investors usually tend to focus much more attention on insider buying than selling, mainly because insiders can sell shares for a wide range of reasons that might not be related to their companies’ current developments or future prospects.

Nonetheless, insider selling data still represents a valuable piece of information that can assist investors in their stock analysis process. For instance, renowned short-seller Jim Chanos of Kynikos Associates uses insider selling to support his reasoning on some occasions. Instead of blindly mimicking each insider purchase and sale in the market, smart investors should use insider trading metrics as additional tools in their security analysis process and attempt to use those metrics to build and support a larger investment thesis. That being said, let’s discuss a set of noteworthy insider transactions reported with the SEC on Friday.

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).


CEO of Well-Known Drugstore Chain Buys 2 Million Shares

The man at the helm of Walgreens Boots Alliance Inc. (NASDAQ:WBA) bought a very sizable block of shares this past week. Stefano Pessina, the Executive Vice Chairman and Chief Executive Officer of the drugstore chain snapped up 2 million shares on Friday at a price tag of $81.41 each. The shares are held by Alliance Sante Participations S.A., which is 100% owned by another corporation controlled by Mr. Pessina. The CEO’s indirect ownership stake held via Alliance Sante Participations amounts to 142.99 million shares. Mr. Pessina also holds a direct ownership stake of 96,500 shares.

In late-October 2015, the well-known drugstore chain agreed to acquire the third-largest drugstore in the United States, Rite Aid Corporation (NYSE:RAD). Although the $9.4 billion merger was originally anticipated to close in the second-half of this year, the two companies pushed the deadline to close the deal to next year, amid delays in selling stores in order to receive regulatory approval. The companies anticipate closing the deal in early-2017, as they expect to agree to sell between 500 and 1,000 stores by the end of 2016. WBA shares are 5% in the red this year. Tom Gayner’s Markel Gayner Asset Management reported owing 2.14 million shares of Walgreens Boots Alliance Inc. (NASDAQ:WBA) through the round of 13F filings for the September quarter.

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The next two pages of this article will discuss more insider transactions reported with the SEC during the final trading day of the previous week.

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