Do Insiders Fear Trouble Ahead For These Companies?

RSP Permian Inc. (NYSE:RSPP) had one of its top executives cash out a significant block of shares this week. Chief Financial Officer Scott McNeill unloaded 40,000 shares on Monday at prices between $28.27 and $28.92. Following the recent sizable sell-off, the CFO currently holds 744,052 shares. The independent oil and natural gas company, which completed its IPO back in January 2014, has seen its shares advance by more than 7% since the start of the year. The company mainly engages in the exploration and production of unconventional oil and liquids-rich natural gas reserves in the Permian Basin of West Texas. Of course, the high volatility in commodity prices has affected RSP Permian’s business, but the company has been hedging the price risk associated with a major portion of its anticipated production through collars, swaps and puts. Even so, the company is still subject to significant risks associated with commodity prices, as its revolving credit facility hinders RSP Permian from hedging more than 85% of its anticipated projection production. 20 hedge fund investors monitored by Insider money with positions in the company accumulated 11.20% of its outstanding common stock at the end of the third quarter. John Labanowski’s Brenham Capital Management upped its stake in RSP Permian Inc. (NYSE:RSPP) by 77% during the June-to-September quarter, ending the quarter with exactly 3 million shares.

Rofin-Sinar Technologies (NASDAQ:RSTI) has registered a high volume of insider selling activity this week, but most of the sales were based on exercising of options. Thus, let’s proceed with the discussion of the spur-of-the-moment insider sales that were not related to freshly-exercised stock options. Director Carl F. Baasel sold 15,000 shares on Monday and 25,000 shares on Tuesday at prices in the range of $28.00-to-$29.08 per share. Following these sales, the Director holds a stake of 117,000 shares. The maker of laser sources and laser-based system solutions derives roughly 70% of its laser sales from the machine tool, automotive, semiconductor, electronics and photovoltaic industries. However, these industries are quite cyclical and may be faced with oversupply on some occasions, which could eventually result in sluggish demand for capital equipment, including the products manufactured by Rofin-Sinar. The shares of the company are trading at relatively the same level they were trading at the beginning of the year despite suffering two major pullbacks this year. At the same time, the stock has embarked on a steady uptrend since late-August and is still trading at an attractive trailing P/E ratio of 19.63. A number of 16 smart money investors tracked by our team were invested in the company at the end of the September quarter, stockpiling 12.40% of its outstanding shares. Royce & Associates, founded by Chuck Royce, cut its stake in Rofin-Sinar Technologies (NASDAQ:RSTI) by 12% during the latest quarter to 2.36 million shares.

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