Cluster of Insider Sales at IT Research Firm – Should You Sell? Guys at Baron Say No; Plus Other Insider Trading

Cluster of Sales by Multiple Executives at IT Research Firm; Should You Sell? Baron Says No!

A number of corporate insiders at Gartner Inc. (NYSE:IT) have been trimming their stakes in the past several weeks. To start with, Chief Executive Officer Eugene A. Hall discarded a total of 61,181 shares on Wednesday at prices between $100.38 and $101.97 per share. Mr. Hall owns around 1.17 million shares after the sale. David Godfrey, Senior Vice President of Global Sales, offloaded 13,000 shares on Monday at $101.50 apiece, a sale that trimmed his ownership to a mere 6,033 shares.

The portfolio manager of Baron Asset Fund, a mutual fund run by asset management firm Baron, recently discussed their investment in Gartner Inc. (NYSE:IT) in a quarterly letter to investors. According to portfolio manager Andrew Peck, the provider of syndicated information technology research is set to “experience continued revenue acceleration because of easing annual comparisons, improved sales force productivity, and sales tactics that continue to be fine-tuned to match current macroeconomic conditions.” As Gartner generates significant free cash flow and has relatively low balance sheet leverage, the guys at Baron believe the IT research firm will start deploying capital more aggressively via share repurchases or an acquisition. As Gartner’s shares currently trade only a few dollars off their 52-week high of $105.45, one would anticipate a jump in the volume of insider selling at the company. The stock has gained 26% in the past year. Royce & Associates, founded by Chuck Royce, owned nearly 356,000 shares of Gartner Inc. (NYSE:IT) at the end of December.

Executive at U.S. Defense Firm Offloads Huge Amount of Shares

One member of Lockheed Martin Corporation (NYSE:LMT)’s executive team sold off almost his entire ownership stake this week. Richard H. Edwards, Executive Vice President of the company’s Missiles and Fire Control business area, sold 12,000 shares on Tuesday at prices varying from $262.04 to $262.53 per share. Mr. Edwards owns a mere 651 shares following the sale, along with an additional 4,835 shares held via a salaried savings plan.

The shares of the U.S. defense firm have risen by 23% in the past 12 months. The management of Lockheed Martin Corporation (NYSE:LMT) anticipates 2017 net sales to increase in the mid-single-digit range compared to 2016 levels, citing increased production and sustainment volume on the F-35 program. Nonetheless, the higher volume on the F-35 program will hit the company’s operating profit margin, as the program is dilutive to its overall profit margin. As President Donald Trump has repeatedly criticized the $379 billion F-35 program as “out of control”, it could be safer for long-serving employees at Lockheed Martin to diversify their holdings just as Mr. Edwards did. Jim Simons’ Renaissance Technologies acquired a new stake of 680,900 shares of Lockheed Martin Corporation (NYSE:LMT) during the December quarter.

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