Clusters of Insider Buying at Retail Energy Services Company and U.S. LNG-Exporter Cheniere Energy, Plus Other Noteworthy Insider Trading

As a general rule, corporate insiders have an edge over other investors when it comes to trading securities because insiders know more about their companies than any outsiders. The stock market regulator in France recently alleged that Ubisoft Montreal’s Chief Executive Officer and four other executives sold shares in the weeks before mid-October of 2013, when the video game publisher announced that Watch Dogs and The Crew would be delayed to 2014. The company’s share price dropped by around 25% on the announcement, so clearly insiders know something outsiders do not.

A great percentage of insider selling represents routine insider selling, triggered by diversification, liquidity reasons, or other reasons unrelated to a company’s current developments or future prospects. However, as shown in the example above, certain insider selling can convey meaningful information for non-insiders. Indeed, corporate insiders have a better understanding of their company’s business and industry environment than most of us, which likely explains their success at trading securities. As the law requires that information be “material” to constitute illegal insider trading, insiders can keep buying and selling securities legally despite having a clear edge over outsiders. Without further ado, let’s proceed to the discussion of a set of noteworthy insider transactions reported with the SEC on Monday.

At Insider Monkey, we track around 750 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details).

Oleksandr Kalinichenko / Shutterstock.com

Cluster of Insider Buying at Retail Energy Services Company

Several insiders at Spark Energy Inc. (NASDAQ:SPKE) piled up shares during the first day of the week, so let’s have a look at the most voluminous purchases. To start with, W. Keith Maxwell III, Chairman of the company’s Board of Directors, acquired 42,185 shares on Monday at prices ranging from $24.89 to $26.50 per share. Following the recent purchase, Mr. Maxwell currently holds an ownership stake of 135,035 shares. Board member James G. Jones II snapped up 1,000 units of common stock on the same day at prices varying from $25.90 to $27.04 per unit, a purchase that lifted his holding to 12,677 units. Kenneth Michael Hartwick, yet another member of the company’s boardroom, snapped up 1,000 shares on Monday at $26.20 apiece, boosting his stake to 10,777 shares.

The growing independent retail energy services company has seen the value of its shares advance by 25% since the start of the year. In early August, Spark Energy Inc. (NASDAQ:SPKE) completed the purchase of all outstanding membership interests in several retail energy providers that serve electrical customers in Maine, New Hampshire, and Massachusetts and had around 121,000 residential customer equivalents (RCEs) at the time of acquisition. Moreover, the company bought membership interests in several other retail energy providers in late August, all New York limited liability companies that serve natural gas and electricity customers and had 220,000 RCEs at the end of August. Jim Simons’ Renaissance Technologies LLC reported owning 60,600 shares of Spark Energy Inc. (NASDAQ:SPKE) in its 13F for the third quarter.

The next two pages of this article will discuss other insider transactions reported with the SEC on Monday.