Insider trading watchers might have already noticed that the volume of insider trading activity has been gaining pace over the past few weeks, after a relatively long period of silent trading. Statistics reveal that insider selling has been significantly more pronounced than insider buying over the past few months. At the same time, the windows for insiders to buy and sell shares seem to be widely opened at the moment, and the fact that insiders have been consistently unloading their holdings makes each insider sale really hard to interpret. With this in mind, this article will disclose the insider selling activity at three companies and will also discuss the performance of these companies in the last several months.
Prior to discussing the insider trading activity, let’s make you familiar with what Insider Monkey does besides providing high-quality articles. At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read more details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning 102% and beating the market by more than 53 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks.
We will start off our discussion with Fabrinet (NYSE:FN), which has seen several top executives unload shares recently. Toh-Seng Ng, Chief Financial Officer since March 2012, sold 53,266 shares on Friday at a weighted average price of $23.05, cutting down his stake to 124,913 shares. President and Chief Operating Officer Harpal S. Gill offloaded 28,370 shares on Friday and 3,548 shares on Monday at prices in the range of $23.00-to-$23.07 per share. After these transactions, the COO currently owns a 208,611-share stake valued at $4.72 million. The provider of electronics-manufacturing services has seen its shares gain 27% this year, but analysts seem to suggest that they have even more upside potential. Specifically, Fabrinet (NYSE:FN)’s stock is currently trading at a forward P/E ratio of 11.03, compared with 17.65 for the S&P 500 Index. This means that either analysts have too high expectations on the company’s earnings potential, or the market greatly undervalues the stock at the moment. Meanwhile, the count of hedge funds tracked by Insider Monkey with positions in the company climbed to 13 from 11 during the second quarter, aggregately accumulating 17.60% of the company’s outstanding shares. Royce & Associates, founded by Chuck Royce, held a 3.94 million-share stake in Fabrinet (NYSE:FN) at the end of that quarter.