Healthequity Inc. (HQY) and Two Struggling Oil-Related Companies Register Insider Selling; Should Investors be Worried?

Past research on insider trading demonstrates that corporate insiders are very good at trading their companies’ stock, with the so-called informational pecking order allowing executives and Board members to generate strong trading profits. Similarly, research proves that outside investors can improve their portfolio returns by following insiders’ moves.

Nonetheless, insider trading metrics work better when combined with alternative stock analysis methods, meaning that those investors blindly following each insider sale and purchase may not do very well for themselves after all. While there is growing consensus of opinion on the theory that insider buying usually conveys positive information, the investment community does not agree on the statement that insider selling represents a bearish signal. Why? Because corporate insiders tend to sell shares for a wide range of reasons that may not be entirely related to their companies’ current conditions, so it’s practically impossible to know why an insider sells shares. Even so, keeping tabs on insider selling activity does make sense, as most insiders tend sell high and buy low quite frequently. Hence, this article will list three companies that had their insiders report insider selling with the SEC on the day Britain voted on whether to leave or stay in the European Union (better say, on the day Britons voted to leave the EU).

Academic research has shown that certain insider purchases historically outperformed the market by an average of seven percentage points per year. This effect is more pronounced in small-cap stocks. Another exception is the small-cap stock picks of hedge funds. Our research has shown that imitating the 15 most popular small-cap stocks among hedge funds outperformed the market by nearly a percentage point per month between 1999 and 2012 (read more details here).

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Managed Health Care Accounts Specialist Registers Heavy Insider Selling

Healthequity Inc. (NASDAQ:HQY) has seen increased insider selling in the past several months, but most insider selling was either related to freshly-exercised stock options or conducted under pre-arranged trading plans. So let’s have a look at the informative spur-of-the-moment insider selling only. Board member Michael O. Leavitt discarded 24,083 shares on Tuesday and 4,000 shares on Wednesday at prices varying from $29.05 to $29.37 per share. These shares were held directly by Third Chapter Inc., an entity controlled by Mr. Leavitt that continues to own 22,917 shares. Mr. Leavitt also holds a direct ownership stake of 30,000 shares.

The health savings account non-bank custodian has seen the value of its shares gain 16% since the beginning of 2016. The core of Healthequity Inc. (NASDAQ:HQY)’s business is the health savings account (HSA), a financial account consumers use to spend and save long-term for healthcare. The number of the company’s HSA members jumped by 51% year-over-year to 2.23 million at the end of April of 2016. The increase was partially driven by the acquisition of rights to be the custodian of the HSA portfolios acquired from The Bancorp Bank and M&T Bank. Meanwhile, the company recorded revenue of $44.0 million for the first quarter of fiscal 2017 that ended April 30, up from $29.9 million posted a year ago.

The number of hedge fund vehicles followed by Insider Monkey with equity positions in the managed health care accounts specialist dropped to 10 from 13 during the first quarter of 2016, whereas the value of those positions rose to $85.03 million from $66.37 million quarter-over-quarter. Israel Englander’s Millennium Management owned 445,554 shares of Healthequity Inc. (NASDAQ:HQY) at the end of March.

Let’s head to the next page of this article, where we will reveal fresh insider selling registered at two other companies.

Oil Services Company Registers Insider Selling Despite Stock Being Down 17% in 2016

TETRA Technologies Inc. (NYSE:TTI) saw a member of its executive team sell a sizable block of shares earlier this week. Elisabeth K. Evans, Vice President of Human Resources since January 2013, discarded 16,205 shares on Thursday at prices that fell between $6.00 and $6.07 per share. After the recent sale, Ms. Evans currently holds an ownership stake of 31,908 shares.

The aforementioned insider selling may be worrisome for investors given that the oil services company has seen its market value plummet by 17% since the start of the year amid efforts to reduce debt burden. In fact, the insider selling comes shortly after TETRA Technologies Inc. (NYSE:TTI) completed a public offering of 11.50 million shares at a price of $5.50 per share, in an effort to reduce debt. The net proceeds from the offering will be used to repay indebtedness outstanding under the company’s senior secured notes and revolving credit facility, as well as cover general corporate expenses. The company’s weak stock performance, relatively unhealthy balance sheet and disappointing financial performance primarily reflect the depressed oil and gas services environment. Lower demand for the company’s products and services reflects the overall reduction in drilling and completion activity.

TETRA Technologies reported revenues of $169.33 million for the first quarter, which decreased from $251.09 million recorded a year ago. There were 15 asset managers from our database invested in the oil services company at the end of March, which amassed roughly 12% of the company’s total number of outstanding shares. Dmitry Balyasny’s Balyasny Asset Management reported owning 6.20 million shares of TETRA Technologies Inc. (NYSE:TTI) in its latest 13F.

Oil and Gas E&P Company Sees CEO Sell Shares, Should Investors Be Worried?

The most influential executive at Panhandle Oil and Gas Inc. (NYSE:PHX) also sold some shares earlier this week. President and CEO Michael C. Coffman discarded 100 Class A shares on Tuesday for $16.50 each and 24,000 Class A shares two days later at $16.00 apiece. Following the recent transactions, Mr. Coffman continues to own 281,074 Class A shares.

The shares of the oil and gas E&P company are up a little less than 1% thus far in 2016. Panhandle Oil and Gas Inc. (NYSE:PHX)’s oil, NGL and natural gas sales for the first three months of 2016 were $6.14 million, down by $6.30 million relative to the same period of the prior year. The decrease was attributable to decreases in oil, NGL and natural gas sales volumes of 21%, 22% and 19%, respectively, as well as a massive plunge in oil, NGL and natural gas prices. Meanwhile, the company’s net loss for the first three months of the year was $7.44 million, as compared to net income of $704,207 reported a year ago. The company’s oil production decrease reflects the natural production decline from the Eagle Ford Shale in South Texas, as well as declining production from twelve fields in Oklahoma, Texas and New Mexico.

The oil and gas E&P company had $54.50 million outstanding under its credit facility at the end of March, with the effective interest rate being 2.67%. However, the company’s borrowing base under its credit agreement was lowered to $80 million from $100 million earlier this month, while cash and cash equivalents were less than $0.5 million on March 31. Douglas T. Granat’s Trigran Investments owns 1.53 million shares of Panhandle Oil and Gas Inc. (NYSE:PHX) as of March 31.

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