Gaming Stocks Dominated Insider Trading Activity Last Friday; SCYNEXIS Inc. (SCYX), Rayonier Inc. (RYN) Register Insider Buying

Insider trading involves the buying or selling of a security by someone who has access to material non-public information about that security. Rules imposed by the U.S. Securities and Exchange Commission were designed to specifically guard against corporate insiders from unfairly profiting from material corporate information that was not public just yet. And even though most corporate insiders play by the rules imposed by the SEC when buying and selling securities of their companies, Board members and executives still have a clear edge over other stock market participants when it comes to the knowledge and understanding of their company’s business and future prospects.

A fresh study completed by several researchers from a top-tier U.S. university concluded that “opportunistic” trades by corporate insiders, trades defined as transactions that are not part of a regular pattern of trading, generate a much higher rate of return than “routine” trades. Without further ado, let’s have a look at a set of noteworthy spur-of-the-moment (i.e. non-routine) insider transactions reported with the SEC during the last trading session of the previous week.

Through extensive research that covered the portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see the details here).

Stokkete/Shutterstock.com

Executive at Battered Video Game Retailer Buys Some Shares Amid Weakness

According to our insider trading data, there had not been any insider buying at GameStop Corp. (NYSE:GME) since the middle of 2012 until last week. Michael K. Mauler, Executive Vice President and President of GameStop International, purchased 10,000 Class A shares on Thursday at prices ranging from $26.80 to $26.98 per share. Following the recent purchase, Mr. Mauler currently owns 120,922 Class A shares of GameStop.

The fresh insider buying comes as the shares of the world’s largest omnichannel video game retailer plunged 12% in the past month. The President of GameStop International is not the only one who views GameStop Corp. (NYSE:GME)’s shares as undervalued; analysts at Hilliard Lyons recently upgraded their rating on the company to ‘Buy’ from ‘Neutral’ with a price target of $33, saying that “valuation is a major factor in our purchase recommendation.” Moreover, Hilliard Lyons analysts “view dividends as a major component of expected total return”, as GameStop’s current dividend, which is believed to be well covered by cash flow, yields 5.46% annually. GameStop shares are 3% in the red thus far in 2016. Ken Griffin’s Citadel Advisors LLC reported ownership of 1.36 million shares of GameStop Corp. (NYSE:GME) in its 13F for the June quarter.

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

Board Member at Low-Priced Pharmaceutical Company Purchases Shares

The insider buying activity appears to have been very intense at SCYNEXIS Inc. (NASDAQ:SCYX) in the past several months, a trend that does not seem to be halting just yet. C. Patrick Machado, who joined the company’s Board of Directors in September of last year, snatched up 40,000 shares on Thursday at prices that fell in the range of $2.83 to $2.96 per share, a purchase that lifted his overall holding to 60,000 shares.

Although the pharmaceutical company developing novel anti-infectives has lost 46% of its market value since the beginning of the year, SCYNEXIS Inc. (NASDAQ:SCYX)’s stock has gained 31% in the past three months. The company’s lead product candidate, called SCY-078, is a novel oral and intravenous drug developed for the treatment of several fungal infections, including life-threatening invasive fungal infections in humans. In late August, the FDA granted orphan drug designation to the company’s SCY-078 for the treatment of invasive Aspergillus infections, which provides seven years of market exclusivity in the U.S. following FDA approval. James E. Flynn’s Deerfiled Management was the owner of 1.77 million shares of SCYNEXIS Inc. (NASDAQ:SCYX) at the end of June.

Director of Timberland REIT Buys Shares Amid Stock Price Weakness

A member of Rayonier Inc. (NYSE:RYN)’s boardroom also purchased a relatively sizeable block of shares this past week. Board member Andrew G. Wiltshire snapped up 4,000 shares on Wednesday at a price tag of $25.77 each, boosting his ownership to 11,356 shares.

The timberland real estate investment trust that has assets in some of the most productive softwood timber growing regions in the United States and New Zealand has seen the value of its stock gain 16% since the start of the year. A fresh plunge in the value of Rayonier’s shares earlier this September appears to have created attractive entry points for corporate insiders. Rayonier Inc. (NYSE:RYN) owns and leases under long-term agreements roughly 2.3 million acres of timberlands in the U.S. South and U.S. Pacific as of the end of June. The company also has a 77%-ownership interest in a joint venture that owns and leases around 436,000 acres of timberlands in New Zealand. Mason Hawkins’ Southeastern Asset Management had 8.06 million shares of Rayonier Inc. (NYSE:RYN) in its portfolio at the end of the second quarter.

The final page of this article discusses fresh insider selling observed at two other companies.

Two Insiders at Growing Developer of Interactive Entertainment Offload Shares

While the insider buying activity at Activision Blizzard Inc. (NASDAQ:ATVI) has been almost non-existent in the past several years, insider selling keeps intensifying. To begin with, Thomas Tippl, Chief Operating Officer since March 2010, liquidated 75,000 shares on Wednesday at prices varying from $43.59 to $44.01 per share, all of which were held through the Thomas and Laura Tippl Family Trust. Mr. Tippl currently owns 511,928 shares via the aforementioned family trust. Board member Robert J. Morgado discarded 29,999 shares on the same day at a price of $43.60 per share, trimming his overall ownership to 239,783 shares.

Morris Mark, the founder of a hedge fund that seeks to invest in businesses that are positively or negatively affected by key structural economic trends, believes in the future prospects of global developer and publisher of interactive entertainment Activision Blizzard. “Interactive entertainment is a core form of leisure time for the younger demographic—action games, sports games, strategy games. As this group ages, the market for the companies that create the product will grow. We’re really interested in industry leaders,” said Mr. Mark recently. Activision Blizzard Inc. (NASDAQ:ATVI)’s shares are up 14% year-to-date. Philippe Laffont’s Coatue Management owns 13.89 million shares of Activision Blizzard Inc. (NASDAQ:ATVI) as of June 30.

Director of Slot Machine and Lottery Company Discards 100K Shares

One member of Scientific Games Corp (NASDAQ:SGMS)’s Board of Directors unloaded a hefty amount of shares last week. David L. Kennedy, Director since 2009, discarded 100,000 shares on Friday at prices that fell between $10.33 and $10.60 per share. After the recent sale, Mr. Kennedy currently owns 121,765 shares.

The shares of the developer of technology-based products and services for the gaming, lottery and interactive gaming industries are 18% in the green this year, partly reflecting the company’s freshly-announced plans to consider joint ventures, an initial public offering and other options for its fast-growing interactive-gaming unit that makes casino-style games for mobile devices. The slot machine and lottery company fell out of favor with the hedge funds followed by Insider Monkey during the second quarter, as the number of funds invested in the company fell to 21 from 24 quarter-on-quarter. Those 21 funds amassed 36% of the company’s total number of outstanding shares. Mark Cohen’s Stone House Capital owned 2.50 million shares of Scientific Games Corp (NASDAQ:SGMS) at the end of the April-June period.

Disclosure: None