Eldest Son of Wal-Mart Stores Inc. (WMT) Founder Makes Charitable Gift; Eye-catching Insider Selling at Regal Entertainment Group (RGC) and Flowers Foods Inc. (FLO)

Rules imposed by the U.S. Securities and Exchange Commission protect corporate insiders against allegations of illegal trading if their trades are conducted under pre-arranged trading plans set up at a time when insiders did not have material non-public information. 10b5-1 trading plans to sell shares at regular intervals or when a stock reaches a certain price can help insiders meet liquidity and portfolio management needs with a much lower risk of facing insider trading allegations. And that is the primary reason Insider Monkey avoids examining insider selling conducted under pre-arranged trading plans.

As executives and directors can theoretically sell shares for a wide range of reasons unrelated to their company’s conditions and future prospects, investors tracking insider trading metrics should differentiate between information-rich insider selling and uninformative insider selling. And by ignoring the activity related the so-called 10b5-1 trading plans, investors get rid of a bulk of uninformative insider selling. Leaving this discussion aside, the Insider Monkey team processed most Form 4 filings submitted with the SEC on Wednesday and pinned down three companies with notable spur-of-the-moment insider selling.

Through extensive research, we have determined that the due diligence that the investors in our database employ, as well as their long-term focus makes them perfect targets to emulate. However, the results of our analysis have also shown that the small-cap picks of these funds can generate much better returns, with the 15 most popular small-cap stocks beating the market by an average of 95 basis points per month (read more details here).

Eldest Son of Walmart Founder Makes $68 Million Charitable Gift, Plus Other Insider Selling

Wal-Mart Stores Inc. (NYSE:WMT) registered some massive insider selling earlier this week. S. Robson Walton, retired Chairman of the company’s Board, reported the sale of 478,158 shares on Monday and 971,842 shares on Tuesday at prices varying from $70.67 to $71.86 per share. These freshly-sold shares were held by the Walton Family Holdings Trust, which continues to own 173.17 million shares. Mr. Walton, the eldest son of Helen Walton and Sam Walton, the founder of Walmart, also made a charitable gift of 940,000 shares on Monday, which reduced his direct ownership stake to 1.99 million shares.

The retail giant has seen its market capitalization gain 18% since the beginning of 2016. In an era when most brick-and-mortar retailers are struggling because of fast-toughening e-commerce competition, Wal-Mart Stores Inc. (NYSE:WMT) has been successfully defending its “recession-proof” title. The world’s largest retailer has enjoyed seven consecutive quarters of positive comparable sales, mainly driven by six consecutive quarters of positive traffic. The biggest threat to the Arkansas-based behemoth is e-commerce giant Amazon.com Inc. (NASDAQ:AMZN), but Wal-Mart has been busy expanding its presence in the e-commerce space as well. Just recently, Wal-Mart announced the beginning of a 30-day free trial for ShippingPass, a two-day shipping program designed to win customers from Amazon’s highly-popular $99 per year Prime program. ShippingPass was launched earlier this year and costs $49 per year for unlimited two-day shipping.

The number of hedge fund vehicles followed by Insider Monkey with stakes in the giant retailer increased to 54 from 49 during the January-to-March period. Warren Buffett’s Berkshire Hathaway holds an ownership stake of 55.24 million shares of Wal-Mart Stores Inc. (NYSE:WMT) as of the end of March.

The next page of this article will discuss the insider selling observed at two other companies.

Strong Performing Motion Picture Exhibitor Sees Two Executive Sell Shares in June

Two executives at Regal Entertainment Group (NYSE:RGC) trimmed their equity holdings thus far this June. To start with, Peter B. Brandow, Executive Vice President, General Counsel and Secretary, discarded 49,024 Class A shares on Wednesday at prices that ranged from $21.50 to $21.52 per share, cutting his overall holding to 219,028 shares. In mid-June, Gregory W. Dunn, President and Chief Operating Officer, sold 25,000 Class A shares at prices that fell between $20.26 and $20.32 per share. After the not-so-distant sale, Mr. Dunn currently holds an ownership stake of 104,916 shares.

The leading motion picture exhibitor operating one of the largest theatre circuits in the United States has seen the value of its shares increase by 16% since the beginning of 2016. Regal Entertainment Group (NYSE:RGC)’s theatre circuit consists of 7,329 screens in 567 theatres in 42 states across the nation along with Guam, Saipan, American Samoa and the District of Columbia. The company’s total admission revenues for the first quarter of 2016 were $515.7 million, up $61.6 million year-over-year. The increase in admission revenues, which accounted for nearly 66% of the company’s top line in the first quarter, was driven by a 7.9% increase in average ticket prices, as well as a 5.3% increase in attendance. The increase Regal Entertainment’s admissions revenues on a per screen basis was slightly higher than the industry’s per screen results for the first three months of 2016.

There were 17 hedge funds tracked by our team with long positions in the motion picture exhibitor at the end of March, as compared to 18 registered at the end of December. Bernard Horn’s Polaris Capital Management upped its position in Regal Entertainment Group (NYSE:RGC) by 30% during the March quarter to 1.10 million shares.

Leading Packaged Bread Producer Registers Insider Selling amid a Flurry of Lawsuits

Flowers Foods Inc. (NYSE:FLO) has seen four different insiders sell shares so far in June, so let’s take a quick look at the most recent insider selling activity. Karyl H. Lauder, Chief Accounting Officer and Senior Vice President, offloaded 23,500 shares on Monday at prices ranging from $17.98 to $17.94 per share. Following the recent transaction, Mr. Lauder currently owns 132,851 shares.

The second-largest packaged bread producer in the United States has seen its market value plunge by nearly 14% since the start of 2016. At the end of May, analysts at boutique investment bank KeyBanc Capital Markets initiated coverage on Flowers Foods Inc. (NYSE:FLO) with a “Sector Weight”, saying that the company may be out-of-favor among investors due to a mix of industry sluggishness, competition and headline risk even though its valuation seems attractive compared to industry peers. The bakery that owns Wonder Bread, Nature’s Own and Tastykake brands, has been sued earlier this year by truck drivers who claimed their were improperly classified as independent contractors. Precisely, the lawsuits allege that the company wrongly classified drivers on its delivery routes as contractors. Hence, truck drivers seek payment for overtime, employee benefits and other compensation, which may put some weight on the company’s bottom line.

The number of asset managers from our system with long positions in the bakery fell to 17 from 21 during the first quarter of 2016. Those money managers amassed 4% of the company’s outstanding shares. Ric Dillon’s Diamond Hill Capital was the owner of 3.57 million shares of Flowers Foods Inc. (NYSE:FLO) at the end of March.

Disclosure: None