Executives at U.S. Homebuilder Discard Shares Amid Resurgent Housing Market, Plus Other Noteworthy Insider Trading

In a recent study on insider trading, several researchers from top-tier U.S. universities split insider trading into two groups: routine insider trading activity, and information-rich insider trading activity which contains strong predictive power. The so-called routine insider selling is usually driven by diversification or liquidity reasons. For instance, investors and stock market participants might have noticed that Bill Gates trades in a pre-announced, routine fashion, as does Tim Cook.

On the other hand, only a small portion of the overall insider buying activity can be considered routine. For example, one could view the insider buying conducted by freshly-appointed board members and executives in order to meet stock ownership guidelines as routine. Going back to the aforementioned study, the researchers behind it found that the abnormal returns associated with routine trades were essentially zero, whereas information-rich insider transactions, called opportunistic, yielded abnormal returns of 82 basis points per month. That said, the following article will discuss a set of noteworthy insider transactions reported with the SEC on Wednesday.

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Insider at North Carolina-Based Commercial Bank Buys Shares

Live Oak Bancshares Inc. (NASDAQ:LOB) was one of the few companies that saw insiders buy shares this week. William L. Williams III, Executive Vice President and Vice Chairman of the company’s Board of Directors, bought a new stake of 30,000 voting shares on Monday and an additional 20,000 shares on Tuesday at prices ranging from $20.05 to $20.45 per share. These shares are held in a grantor-retained annuity trust (GRAT). Mr. Williams also holds a direct ownership stake of 1.25 million shares.

The bank holding company for North Carolina-based commercial bank Live Oak Banking Company has seen the value of its stock increase by 44% in the past year, which would normally encourage insiders to sell rather than buy shares. The bank focuses on offering lending services to small businesses across the nation in targeted industries. According to a fresh public statement, Live Oak Bancshares Inc. (NASDAQ:LOB) ended the previous year in “terrific fashion” (was Donald Trump behind this statement?), hitting its highest ever quarterly production with more than $500 million in loan originations. The company’s management anticipates strong double-digit growth in origination volumes going forward. Small-cap specialist Royce & Associates, founded by Chuck Royce, owned 136,600 shares of Live Oak Bancshares Inc. (NASDAQ:LOB) at the end of September.

The next page of this insider trading article will discuss fresh insider buying observed at two other companies.

Executive at Mass Customization Company Purchases Shares After Announcing Restructuring Plans

One member of Cimpress NV (NASDAQ:CMPR)’s management team piled up a block of shares earlier this week. Cornelius David Arends, Executive Vice President and President of the Upload and Print business unit, bought 4,640 shares on Monday at prices that fell between $85.80 and $86.38 per share. The shares were held indirectly via a limited company which owns 11,900 Cimpress shares after the sale.

The shares of the mass customization company plunged in late-January after the company released disappointing earnings for the second quarter of fiscal 2017 and announced a business restructuring initiative, which might have served as a trigger for the purchase mentioned above. Although Cimpress NV (NASDAQ:CMPR)’s revenue grew by 16% year-over-year to $576.9 million in the three months that ended December 31, the company’s net operating profit after taxes (NOPLAT) – an indicator of the profits generated from core operations – decreased by $31.9 million to $50.6 million. More importantly, Cimpress announced plans to decentralize its business so as to improve accountability and simplify decision-making, which seems to be a natural step in the company’s evolution. Nonetheless, investors seem to worry about the short-term effects of this restructuring effort on its near-term bottom-line figures, especially the earnings figure for the third quarter of its fiscal 2016, as the company plans to complete the majority of the changes during this quarter. Cimpress shares are up by 6% in the past year. Glenn Greenberg’s Brave Warrior Capital was the owner of 1.84 million shares of Cimpress NV (NASDAQ:CMPR) on September 30.

Board Member of Fast-Expanding Bank Buys Shares

A member of Horizon Bancorp (NASDAQ:HBNC)’s Board of Directors snapped up a block of shares this week as well. Board member Maurice F. Winkler III acquired an 8,000-share block on Tuesday at a price tag of $25.55 per share, which is held via his Individual Retirement Account (IRA). Mr. Winkler owns an additional 14,730 shares through a trust fund.

The registered bank holding company headquartered in Indiana has completed a series of acquisitions over the past several years, launching an aggressive expansion through mergers and acquisitions associated with increased risks due to unexpected credit quality problems of acquirers’ loans. In mid-July 2016, Horizon Bancorp (NASDAQ:HBNC) completed the acquisition of state-chartered savings bank The LaPorte Savings Bank, while in early-June Horizon completed the acquisition of Indiana corporation Konsciusko Financial Inc. and its subsidiary Farmers State Bank. Horizon also acquired CNB Bancorp, the parent company of The Central National Bank and Trust Company, in early-November. Horizon’s shares are down by 8% thus far in 2017. Jim Simons’ Renaissance Technologies reported owning 189,120 shares of Horizon Bancorp (NASDAQ:HBNC) in its 13F filing for the third quarter.

On the final page of this article, we’ll shift our focus to some fresh insider selling observed at two other companies.

Cluster of Insider Selling at Top Performing Banking Company

Three different insiders at Western Alliance Bancorporation (NYSE:WAL) offloaded shares at the beginning of the week. To start with, board member John Peter Sande III discarded 5,945 shares on Monday at a price of $50.11 per share, cutting his ownership to 17,272 shares. Board member James E. Nave liquidated 50,000 shares on the same day at prices varying from $49.61 to $50.13 per share, held in a profit-sharing plan that currently owns 96,005 shares. Dr. Nave also holds a direct ownership stake of 251,876 shares. Last but not least, Randall S. Theisen, Executive Vice President and General Counsel, sold 3,120 shares on Tuesday at $49.80 apiece, a sale that trimmed his ownership to 40,001 shares.

The shares of the Arizona-based bank holding company are trading slightly below their 52-week high of $50.76, after having jumped by an impressive 58% in the past year. Western Alliance Bancorporation (NYSE:WAL) was ranked fourth on Forbes’ 2017 list of “Best Banks in America.” Forbes ranked the 100 largest U.S. banks based on ten different metrics related to growth, profitability, capital adequacy, and asset quality. The banking company was ranked tenth on the 2016 list, which shows that Western Alliance had a productive 2016. Ken Griffin’s Citadel Advisors had around 260,000 shares of Western Alliance Bancorporation (NYSE:WAL) in its portfolio at the end of the third quarter.

Executives at #3 U.S. Homebuilder Discard Shares Amid Resurgent Housing Market

Two members of PulteGroup Inc. (NYSE:PHM)’s executive team trimmed their equity stakes in the company at the beginning of the week. James R. Ellinghausen, Executive Vice President of Human Resources, sold 47,744 shares on Monday at $21 each, cutting his holding to 435,187 shares. Harmon D. Smith, Chief Operating Officer and Executive Vice President, discarded 48,010 shares on the same day at prices that ranged between $21.40 and $21.43 per share. Mr. Smith owns 249,547 shares after the Monday sale.

The shares of the nation’s third-largest homebuilder jumped in late-January after the company released better-than-expected financial results for the fourth quarter, boosted by a jump in home sales and average selling price. PulteGroup Inc. (NYSE:PHM), which predominantly sell single-family homes, said that the average price of homes sold increased to $391,000 in the final quarter of 2016 from $353,000 in the same quarter of 2015. Meanwhile, the number of homes sold jumped to 6,197 from 5,662. For that reason, PulteGroup’s home sales revenue rose by 21.3% year-on-year to $2.42 billion. The shares of the U.S. homebuilder are up by 29% in the past year. John Horseman’s Horseman Capital Management added a 750,000-share stake in PulteGroup Inc. (NYSE:PHM) to its portfolio during the fourth quarter.

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