Cluster of Insider Buying at New York & Company Inc. (NWY); CEO of Washington-Based Bank Offloads Shares; Other Insider Trading

What does the term “insider trading” mean and why do investors need to keep track of insider trading behavior? Insider trading involves the buying and selling of equity securities by individuals who hold access to material, non-public information. While insider trading activity can be both legal and illegal, this distinction is not very important for the non-insiders monitoring insider trading metrics for investment purposes.

Let’s move on to the question of whether investors should keep tabs on insider trading behavior or not. Indeed, corporate insiders have a better understanding about their companies’ business operations and future prospects than any of us, so their spur-of-the-moment transactions can serve as great tips for outsiders. There aren’t many reasons corporate insiders are purchasing shares in their own companies, with the primary reason being that their companies’ shares are severely undervalued. On the other hand, insiders can sell shares for any number of reasons, which may have nothing to do with current market conditions or any firm-specific developments. However, as corporate insiders usually follow the pattern of buying low and selling high, spontaneous insider selling should not be ignored by the investment community. That said, let’s have a look at a set of noteworthy insider transactions reported with the SEC on Wednesday.

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Cluster of Insider Buying is Forming at Struggling Specialty Apparel Chain

Soon after New York & Company Inc. (NYSE:NWY)’s President and Chief Operating Officer, John M. Worthington, purchased 11,500 shares on January 13, two other insiders have boosted their equity holdings in the company so far. To start with, Board member James O. Egan snapped up 5,206 shares on Monday at a price tag of $2.08 each, a purchase that lifted his overall holding to 70,561 shares. Non-Executive Chairman Grace A. Nichols, former CEO of Victoria’s Secret, bought 10,000 units of common stock last Tuesday at $2.21 each, boosting her ownership to 303,026 shares.

The shares of the specialty retailer of women’s fashion apparel and accessories are up 3% in the past 12 months, but have lost 29% of their value in the past five years. The management of New York & Company Inc. (NYSE:NWY) recently said that comparable store sales for the nine weeks that ended December declined by 1.7% due to a challenging retail landscape, characterized by soft traffic and a highly promotional environment. As more insiders at the specialty apparel chain have been purchasing shares as of late, one may anticipate a recovery of the company’s performance. New York & Company has also been faced with some criticism from one shareholder, who recently revealed dissatisfaction with the poor stock performance and the management’s failure to deliver on some promises made several years ago (e.g. cost savings and a long-term target of high single-digit operating margin). Brett Hendrickson’s Nokomis Capital owned 1.00 million shares of New York & Company Inc. (NYSE:NWY) at the end of September.

Let’s head to the next two pages of this insider trading article, where we organize a discussion around fresh insider buying and selling at four other companies.

Executive at Strong-Performing Multi-State Bank Holding Company Buys Shares

One member of American National BankShares Inc. (NASDAQ:AMNB)’s executive team also purchased a small block of shares earlier this week. Ramsey K. Hamadi, Executive Vice President and Chief Administrative Officer, snatched up 1,130 shares on Monday at a price tag of $34.93 each. Mr. Hamadi currently owns an aggregate of 16,692 shares after the recent purchase.

The holding company for American National Bank, a community bank serving southern and central Virginia and north central North Carolina with 26 banking offices and two loan production offices, has seen the value of its shares rise by 45% in the past year. American National BankShares Inc. (NASDAQ:AMNB) enjoyed loan portfolio growth of 15.8% in 2016, partially reflecting improvement in the local and regional economies. The multi-state bank holding company’s net income for 2016 increased to $16.30 million from $15.04 million for 2014, mainly due to lower provision for loan losses and a reduction in non-recurring merger-related expenses. Jim Simons’ Renaissance Technologies LLC was the equity holder of 81,110 shares at the end of the third quarter.

Insiders at Services Provider to Power Generation and Renewable Energy Markets Keep Selling Shares

The volume of insider selling at Argan Inc. (NYSE:AGX) has been steadily growing this year, though most sales were related to freshly-exercised stock options. William F. Griffin Jr., President and Chief Executive Officer of its wholly-owned subsidiary Gemma Power Systems, discarded 25,000 shares on Monday at a weighted average price of $70.33 per share, which were held in the William F. Griffin Jr. Revocable Trust. Mr. Griffin currently owns an indirect ownership stake of 306,150 shares through the trust fund mentioned above. Considering the cluster of insider selling observed at Argan in early October 2016, additional insider insider selling at the company do not necessarily inspire optimism.

The shares of the provider of engineering, construction and technical services to the power generation and renewable energy markets are trading near their 52-week high of $76.70, after having gained a hefty 158% in the past year alone. Argan Inc. (NYSE:AGX)’s contract backlog increased to $1.2 billion as of the end of October from $1.1 billion as of the end of January 2016. Meanwhile, the company’s revenues for the three months that ended October jumped by 54% year-over-year to $175.4 million. While insiders have been heading for the exits, the hedge fund industry has increased its exposure to the high-flying company. The number of asset managers from our system invested in Argan rose to 17 from 13 during the third quarter. Joel Greenblatt’s Gotham Asset Management added a 116,000-share stake in Argan Inc. (NYSE:AGX) to its portfolio during the third quarter.

The final page of this article will focus on discussing insider selling at two other companies.

Board Members at Nr. 1-Ranked Bank (According to Forbes) Unload Shares

Two members of PacWest Bancorp (NASDAQ:PACW)’s boardroom offloaded shares this week. To begin with, Board member Craig A. Carlson discarded 1,124 shares on Tuesday at $54.54 apiece, cutting his ownership to 6,207 shares. Director Andrew B. Fremder sold out his entire stake of 22,179 shares on the same day at prices ranging from $53.94 to $54.77 per share.

The holding company for its Los Angeles-based wholly-owned banking subsidiary, Pacific Western Bank, has seen its market cap increase by 55% in the past 12 months. According to a recent Forbes article that ranked the biggest banks on ten different metrics, PacWest Bancorp (NASDAQ:PACW) represents the number one-ranked bank after reaching the top 20 in eight of the ten metrics measured. The Los Angeles-based bank enjoyed a 5.4% net interest margin in the period that ended September 30 – the third-best among the 100 largest banks, as well as a return on average assets of 1.6% – the fourth-best on the list. Ken Fisher’s Fisher Asset Management reported owning 2.08 million shares of PacWest Bancorp (NASDAQ:PACW) in its 13F for the fourth quarter.

CEO of Washington-Based Bank Offloads Shares After Announcing Retirement

The man in charge of Washington Federal Inc. (NASDAQ:WAFD) discarded a great deal of shares earlier this week. Chairman and CEO Roy M. Whitehead liquidated 14,000 shares on Wednesday, 10,550 shares on Tuesday and 7,000 shares on Monday at prices that fell between $33.37 and $34.25 per share. Mr. Whitehead recently announced his decision to leave the post as CEO at the banking company after nearly 17 years on the job effective April 1, but he will take the new position of Executive Chairman of the company’s Board. The soon-to-retire CEO currently owns an aggregate of 356,310 shares following the recent sales.

The shares of the largest bank headquartered in Washington state are up 63% in the past year. Washington Federal Inc. (NASDAQ:WAFD) conducts its business operations through federally-insured national bank subsidiary Washington Federal, National Association. Earlier this month, the bank’s boardroom approved a regular quarterly cash dividend of $0.15 per share, up from $0.14 from the previous quarter. The Board also approved a one-time special dividend of $0.25 per share. Ray Carroll’s Breton Hill Capital acquired a stake of 7,863 shares of Washington Federal Inc. (NASDAQ:WAFD) during the fourth quarter.

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