‘Cluster Selling’ at Medical Properties Trust Inc. (MPW), Plus Light Insider Selling at 2 Other Companies

Officers and directors of publicly-traded companies have two means of buying or selling their companies’ shares: on the open market, or via pre-arranged trading plans, which are known as 10b5-1 plans. A good deal of insider selling is now conducted under these 10b5-1 plans, which Insider Monkey avoids reporting, as past research shows that sales executed under pre-arranged trading plans are not informative about future stock performance, which isn’t surprising given their nature. When it comes to the usefulness of insider selling activity, one should bear in mind that corporate insiders usually sell shares for a wide array of reasons that might not be related to their companies’ future prospects. However, insider trading watchers should pay attention to clusters of insider selling, which may represent red flags that indicate that certain companies are approaching or exceeding their ‘true’ or ‘fair’ market value. With that in mind, the following article will discuss three companies with noteworthy insider selling, one of which registered a cluster of insider selling that is worth monitoring.

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Three Top-Tier Executives Offloaded Shares of This REIT

Let’s begin our discussion with the company that has witnessed a cluster of insider selling over the past two weeks, that being Medical Properties Trust Inc. (NYSE:MPW). This cluster of insider selling is quite notable given that three of the most influential insiders at the company unloaded sizable blocks of shares on the open market over the past two weeks. To start with, R. Steven Hamner, Executive Vice President and Chief Financial Officer, sold 155,000 shares on Monday at $13.18 apiece, trimming his overall holding to 1.02 million shares. Moreover, Emmett E. McLean, Executive Vice President and Chief Operating Officer, sold 50,000 units of common stock on Wednesday at a sale price of $13.27 per unit, which cut his ownership to 759,252 units. Last but not least, President and Chief Executive Officer Edward K. Aldag Jr. discarded 245,627 shares at the end of March at a weighted average price of $12.88. Following the not-so-distant sale, the CEO holds an ownership stake of 1.98 million shares.

Medical Properties Trust Inc. (NYSE:MPW) is a self-advised real estate investment trust (REIT) that focuses on acquiring, developing and leasing healthcare facilities across the United States and other international markets. The REIT’s facilities include 110 general acute care hospitals, 23 long-term acute care hospitals, 69 inpatient rehabilitation hospitals, and three medical office buildings. At the end of March, Medical Properties Trust announced an agreement with Brentwood-based hospital company RegionalCare Hospital Partners, under which MPT’s investment in the operations of Capella Healthcare Inc. will be merged with RegionalCare. This merger is set to create one of the largest healthcare operating companies in the United States, with MPT being expected to receive $550 million in net proceeds from the transaction. Soon after the announcement of this transaction, analysts at JMP Securities increased their price target on the REIT to $13 from $12.50 and reiterated their ‘Market Outperform’ rating on it, saying that the deal enhances the company’s current leverage. Medical Properties Trust said that the $550 million figure will be used to reduce its debt load, with the net debt figure anticipated to be 5.6-times pro-forma annualized EBITDA following this move.

MPT shares have gained 16% since the beginning of 2016 and currently change hands at around 13.1-times expected earnings, below the forward P/E multiple of 17.4 for the S&P 500 Index. The REIT also boasts an impressive dividend yield of 6.57%. There were nine hedge funds tracked by Insider Monkey with stakes in Medical Properties Trust Inc. (NYSE:MPW) at the end of 2015, with Amy Minella’s Cardinal Capital owning 3.63 million shares.

The concluding pages of this article discuss the insider selling registered at UDR Inc. (NYSE:UDR) and Chase Corporation (NYSEMKT:CCF).

Another REIT Witnesses Board Member Sell Sizable Block of Shares

UDR Inc. (NYSE:UDR) had a member of its Board of Directors unload a sizable block of shares earlier this week. Director Jon A. Grove sold 10,000 shares on Tuesday at prices between $36.72 and $36.74 per share, cutting his overall holding to 472,308 shares.

UDR is a self-administered real estate investment trust that owns, acquires, renovates, develops, and manages apartment communities. The REIT’s consolidated real estate portfolio consists of 133 communities with 40,728 apartment homes as of December 31. The REIT has also been developing one wholly-owned community with 516 apartment homes, as well as four unconsolidated joint venture communities with 1,173 apartment homes. In general, UDR owns or has an ownership position in 50,646 apartment homes as of the end of 2015, which include 3,222 homes under development. UDR’s 2015 net operating income for same-store community properties (properties acquired, developed and stabilized before the beginning of 2014 and held at the end of 2015) increased by 6.7% to $469.13 million. The increase was mainly driven by higher property rental income, which was partly offset by an increase in operating expenses. Moreover, the REIT’s management anticipates its 2016 net operating income to increase in the range of 6.50% to 7.00%.

UDR pays out an annualized dividend of $1.18 per share, which equates to a current dividend yield of 3.27%. The company’s upcoming quarterly dividend payment in May is set to mark the 174^th consecutive quarterly dividend paid out by the company. UDR’s share have gained 11% in the past 12 months, but are down by 3% year-to-date. The number of hedge funds in our system with long positions in the REIT increased to ten from nine during the December quarter. Ken Heebner’s Capital Growth Management acquired a new stake of 400,000 shares in UDR Inc. (NYSE:UDR) during the final quarter of 2015, while Jim Simons’ Renaissance Technologies upped its stake in the REIT by 58% during the quarter, to 1.18 million shares.

Mild Insider Selling at Strong-Performing Diversified Manufacturer

Chase Corporation (NYSEMKT:CCF) also had two Board members discard some shares this week. Former Director Ronald Levy, who served on the company’s Board of Directors from 1994 through February 2016, sold 2,000 shares on Wednesday for $56.25 apiece. Mr. Levy currently owns 19,410 shares. Current Director Lewis P. Gack unloaded a mere 250 shares a day earlier at a price of $55.91 per share, cutting his ownership to 8,886 shares.

Chase Corporation is a diversified manufacturing company serving the wire and cable, specialty chemicals, bridge construction, advanced converting, and electronics industries. The company’s total revenue for the six months that ended February 29 reached $112.40 million, an increase from $108.24 million reported for the same period a year earlier. The performance of the Industrial Materials segment, which accounted for 77% of total revenue for the six-month period, benefited from sustained demand for the company’s pulling and detection, electronic coatings, and specialty chemical intermediates products. On the contrary, a decrease in demand for wire and cable, and fiber optic cable components products put some pressure on the company’s top-line results. Meanwhile, revenue generated from the Construction Materials segment decreased slightly year-over-year due to slowing sales volume for pipeline coatings products related to water infrastructure projects in the Middle East. Chase Corporations’ domestically-produced pipeline coatings products, which target North American oil and gas markets, registered an increase in sales volume, so the company was not severely impacted by the depressed state of those markets. Net income for the six months that ended February 29 reached $14.42 million, up from $11.07 million reported a year earlier.

Chase Corporation has seen its market capitalization gain 39% year-to-date, to nearly $526 million. The hedge fund sentiment towards the manufacturing company remained unchanged during the fourth quarter, with six hedge funds having amassed almost 10% of the company’s outstanding common stock as of the end of the quarter. Royce & Associates, founded by Chuck Royce, cut its stake in Chase Corporation (NYSEMKT:CCF) by 8% during the December quarter, ending 2015 with approximately 656,000 shares.

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