Some studies conclude that companies registering insider buying outperform companies with insider selling, which makes us believe insider selling does convey meaningful information after all. By keeping tabs on insider selling, investors could theoretically avoid investing in risky and poor-performing stocks or cash out at the right time.
There is general consensus that firms and investors benefit from accurate pricing of securities. The “true” or “correct” price of a security should reflect all information related to the security, but outsiders may not have access to each piece of information related to all publicly traded companies. However, corporate insiders, especially top-tier executives, have access to more up-to-date information about their companies’ current operations and future prospects than any analyst, journalist or investor out there. This essentially means that corporate insiders have a good feel for what the “correct” price of a security is. This is the primary reason investors need to closely monitor insider trading metrics. Insider Monkey processed most Form 4 filings submitted with the SEC on Tuesday and identified three companies with noteworthy insider selling.
Through extensive research, we have determined that the due diligence that the investors in our database employ, as well as their long-term focus makes them perfect targets to emulate. However, the results of our analysis have also shown that the small-cap picks of these funds can generate much better returns, with the 15 most popular small-cap stocks beating the market by an average of 95 basis points per month (read more details here).
Transitioning Auto Insurer Has Board Member Unload Sizable Block of Shares
Progressive Corp (NYSE:PGR) recently registered its most voluminous insider sale of 2016. Board member Bradley T. Sheares offloaded 19,564 shares on Friday at prices ranging from $31.94 to $32.00 per share. After the recent sizable sell-off, Dr. Sheares continues to own 4,964 shares.
The fourth-largest auto insurer in the United States has seen its shares advance a little less than 1% since the beginning of 2016. Progressive Corp (NYSE:PGR) has broadened its offerings by selling home insurance alongside its well-known auto coverage. Precisely, the sustained roll out of its “Platinum” product, which provides a single offering that combines both home insurance and auto insurance, represent the main growth catalyst for the company ahead. The company’s net premiums written increased by 15% year-over-year in the first quarter of 2016 to $5.82 billion, while net premiums earned grew by 14% to $5.32 billion. Net premiums written and earned for the company’s vehicle businesses increased by 11% and 10%, respectively. In mid-May, Progressive also announced that CEO Glenn Renwick was stepping down after being at the helm of the company for more than 15 years and would be replaced by a long-term senior executive, Tricia Griffith.
The auto insurer received some love from the hedge fund vehicles followed by Insider Monkey during the first quarter of 2016, as the number of funds invested in the company climbed to 30 from 23 quarter-over-quarter. Those asset managers stockpiled nearly 4% of the company’s outstanding shares. Andreas Halvorsen’s Viking Global Investors LP acquired a new stake of 1.60 million shares of Progressive Corp (NYSE:PGR) during the March quarter.
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The second page of this insider trading article will discuss fresh insider selling registered at two other companies.