Former CEO of Media-Ratings Firm Offloads Shares, Board Member at Low-Priced Drilling Contractor Buys Huge Block of Shares, and Other Transactions

History shows that corporate insiders’ purchases of company stock outperform stock market gauges by a significant margin. On that note, the investment community finds one primary reason corporate insiders purchase shares of their companies – insiders believe the share price of their company’s stock does not reflect the “true” earnings power of the business. This thesis seems viable, as it’s hard to come up with alternative explanations as for why insiders would spend their hard-earned money to purchase shares.

Retail investors and other market participants interested in insider trading behavior can always visit the website of the U.S. SEC to find fresh insider trading transactions. But truth be told, it’s quite cumbersome to scan through dozens or hundreds of Form 4 filings on a daily basis. With the help of our insider trading database, the Insider Monkey team compiles daily sets of insider buying and selling that could deserve investors’ time and attention. Our team processed the Form 4 filings submitted with the SEC on Tuesday and identified five companies with notable insider trading activity.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively the most bullish on. Over the past year, this strategy generated returns of 39.7%, topping the 24.1% gain registered by S&P 500 ETFs. Insider Monkey’s enhanced small-cap strategy registered gains of more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points in the last 4.5 years (see the details here).

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Board Member at Low-Priced Drilling Contractor Buys Shares

One member of Parker Drilling Company (NYSE:PKD)’s Board of Directors purchased a relatively sizeable block of shares at the end of the previous week. Peter Thomas Fontana bought 160,000 shares on Friday at a price of $1.90 per share. Mr. Fontana currently owns an aggregate of 168,021 shares following the purchase.

The provider of drilling services to the energy industry has seen the value of its shares plunge by 26% since the beginning of the year. Parker Drilling Company (NYSE:PKD)’s shares took a hit recently when the company announced both common stock and mandatory convertible stock offerings to increase liquidity. However, the drilling contractor does not seem to be in desperate need of capital, as the firm had $119.69 million in cash and cash equivalents on hand at the end of December and an additional $90.25 million undrawn capacity under its revolving credit facility. This is sufficient to finance the $40 million-to-$50 million planned capital spending for 2017. According to Parker Drilling’s management, “2016 was one of the most challenging operating environments in the energy services industry” and in the company’s 82 years of existence. Don Morgan’s Brigade Capital was the equity holder of 3.18 million shares of Parker Drilling Company (NYSE:PKD) at the end of December.

The second page of the article discusses fresh insider buying at two other companies.

Cluster of Insider Buying at Independent Energy Company Amid Disappointing 2017 Stock Price Performance

Four corporate insiders at SM Energy Co (NYSE:SM) snapped up shares at the beginning of the week, so let’s have a look at the most voluminous purchases. To start with, President and Chief Executive Officer Javan D. Ottoson bought 5,000 shares on Monday at a price of $25.22 per share, lifting his overall holding to 143,102 shares. David W. Copeland, Executive Vice President, General Counsel and Corporate Secretary, purchased 10,000 shares on the same day for $25.22 each, a purchase that boosted his stake to 86,451 shares. William D. Sullivan, Non-Executive Chairman of the company’s Board of Directors, snatched up 9,800 shares for $25.69 each and 200 shares at $25.70 apiece on Monday. Mr. Sullivan owns 70,479 shares after these purchases.

The shares of the independent energy company engaged in the acquisition, development and production of crude oil and condensate, natural gas, and natural gas liquids have dropped 28% thus far in 2017. SM Energy Co (NYSE:SM) acquired around 62,000 net acres in the Midland Basin in Howard and Martin Counties, Texas during 2016 and the company recently announced better-than-expected results on eight new wells located in Howard County. Nonetheless, the company’s shares took a hit after the management hinted it plans to spend more time and money testing its acreage to optimize future development plans instead of ramping up production, so investors appear to be concerned that production growth could be lower than previously anticipated. A number of 32 asset managers from our system were invested in the independent energy company at the end of December, stockpiling around 10% of the company’s outstanding shares. Steve Cohen’s Point72 Asset Management owned 1.28 million shares of SM Energy Co (NYSE:SM) at the end of December.

Director at Leading Player in Industrial Markets Buys Shares

One member of Lydall Inc. (NYSE:LDL)’s boardroom also piled up some shares earlier this week. Board member Matthew T. Farrell, appointed to the Lydall Board in August 2003, bought 2,000 shares on Monday at the purchase price of $51.90 per share, which increased his ownership to 84,385 shares.

The shares of the player in industrial filtration markets tanked several days ago when the company released its financial results for the fourth quarter and full-year of 2016. The company’s shares are 18% in the red thus far in 2017. Lydall Inc. (NYSE:LDL)’s fourth-quarter net sales rose to $144.2 million from $131.4 million, with an acquisition contributing $17.7 million to the top-line figure. In early July 2016, Lydall acquired the nonwoven and coating materials businesses operating under the Texel brand from Canadian-based ADS Inc. However, the acquirer’s technical nonwovens segment, which mainly produces needle punch nonwoven solutions for myriad industries and applications, experienced an organic sales drop of 19.9% year-over-year, reflecting weakness in the domestic power generation market and continued softness in China. Royce & Associates, founded by Chuck Royce, reported ownership of 253,000 shares of Lydall Inc. (NYSE:LDL) through the latest round of 13Fs.

As usual, the final page of our insider trading article will discuss noteworthy insider selling activity observed at two other companies.

Former CEO of Media-Ratings Firm Offloads Huge Amount of Shares

The former head of Nielsen N.V. (NYSE:NLSN) offloaded a great deal of shares in the past several days. Board member David L. Calhoun, former Chief Executive Officer of Nielsen and Executive Chairman of the Board from January 2014 to December 2015, sold 111,425 shares on Friday and 18,575 shares on Monday at prices between $44.64 and $45.32 per share, cutting his direct ownership stake to 506,921 shares. Mr. Calhoun also discarded a 100,000-share block on Monday, held by various trusts for the benefit of his family members.

The global performance management company has seen its market capitalization drop by 12% in the past 12 months. Nielsen N.V. (NYSE:NLSN) recently reported revenues of $6.31 billion for the full-year of 2016, up from $6.17 billion generated during 2015. Revenues increased 4.1% year-over-year on a constant currency basis. More importantly, the media-ratings firm anticipates 2017 constant currency revenue growth in the range of 5%-to-6%. As companies require an increasing amount of data and analytics to formulate strategies and direct operations, the market for business information and insights is likely to keep expanding going forward. There were 27 hedge funds tracked by Insider Monkey with long positions in Nielsen at year-end, as compared to 26 recorded at the end of the September quarter. LMR Partners, founded by Ben Levine, Andrew Manuel and Stefan Renold, sold out its entire stake of around 64,000 shares in Nielsen N.V. (NYSE:NLSN) during the fourth quarter.

Executive at Energy Delivery Company Discards Shares

One member of Eversource Energy (NYSE:ES)’s management team also unloaded a sizeable block of shares earlier this week. Leon “Lee” Olivier, Executive Vice President of Enterprise Energy Strategy and Business Development, liquidated 35,000 shares on Monday at prices varying from $58.68 to $59.07 per share. Mr. Olivier currently owns a total of 117,757 shares after this sale.

The shares of the energy delivery company are up 6% since the start of the year. In mid-October, Argus analysts warned that “utilities as a group are heavily debt-financed and aggregate interest charges are likely to rise in the event of a rate hike,” implying that the rising interest-rate environment is likely to put downward pressure on Eversource Energy (NYSE:ES)’s shares. According to Argus analysts, “equity investors seeking income often move away from utility shares and turn to the bond market” in a rising interest rate environment. Just recently, Eversource Energy agreed to team up with DONG Energy, a leader in offshore wind power, to jointly develop the Bay State Wind project, a proposed offshore wind farm to be located roughly 15-25 miles south of Martha’s Vineyard.

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