3 Companies Where Top Executives Are Cashing Out; Should Investors Be Worried?

Natus Medical Inc. (NASDAQ:BABY) saw one of its top executives unload shares last week. President and Chief Executive Officer James B. Hawkins sold 14,103 shares on Wednesday and 43,408 shares on Friday at prices between $48.80 and $49.34 per share. Following the recent transactions, the CEO currently holds a stake of 377,274 shares. The financial performance of the provider of newborn care and neurology healthcare products and services mainly depends on the global economic conditions, considering that its sales are highly correlated to the capital spending of U.S hospitals and the healthcare spending of government institutions outside the nation. The shares of Natus have gained 35% since the beginning of the year and are currently trading at an all-time high of over $48 a share, thanks to its spectacular financial performance.

Natus Medical reported net income of $10.9 million on consolidated revenue of $94.6 million for the third quarter, compared with $7.8 million in income on revenue of $89.9 million reported a year ago. This strong performance is mainly attributable to the company’s recent acquisitions and the organic growth realized in its Newborn Care business. Even so, it appears that this growth does not entirely justify the company’s rich trailing P/E ratio of 40.31, so Natus will have to keep delivering strong financial growth each quarter so as to satisfy its current shareholders. Ken Fisher’s Fisher Asset Management holds a 601,141-share position in Natus Medical Inc. (NASDAQ:BABY) as of September 30.

Let’s wrap up our discussion by examining the insider sales witnessed at Marsh & McLennan Companies Inc. (NYSE:MMC). Alexander S. Moczarski, Chief Executive Officer and President of Marsh & McLennan Companies’ reinsurance arm Guy Carpenter, discarded 25,509 shares on Wednesday at a sale price of $55.45 per share, trimming his stake to 39,267 shares. Marsh & McLennan Companies is the parent company of several risk experts and specialty consultants, including Guy Carpenter, and operates as a global professional services firm. The shares of the company are slightly more than 3% in the red year-to-date, after suffering a significant pullback in mid-August. Its consolidating revenue for the third quarter added up to $3.1 billion, which marked a decrease of 1% year-over-year. The foreign currency translation significantly impacted the company’s top-line, causing a 7% decrease in revenue year-over-year. Meanwhile, the stock is trading at a trailing P/E ratio of 20.11, which is slightly below the average for the companies included in the S&P 500.

The number of hedge funds with stakes in the company decreased to 26 from 32 during the third quarter. Ric Dillon’s Diamond Hill Capital cut its exposure to Marsh & McLennan Companies Inc. (NYSE:MMC) by 5% during the September quarter, remaining with 2.70 million shares.

Disclosure: None