It has been proven that insider purchases and sales are fairly accurate predictors of future stock performance. Considering the fact that insiders might have access to important information which might not be available to the public, it makes a lot of sense to track insider activities when making investment decisions. It is generally believed that insider purchases bear more information than insider selling, as corporate insiders can sell shares for a variety of reasons not related to the performance of the company. However, when insiders start unloading significant portions of their stakes at a high pace, current and potential investors should be ready to act accordingly, as the company might face some issues along its way. From time to time, insider selling might raise red flags and investors should be ready to identify them. In this article we will be discussing three companies that had a large volume of insider selling on Wednesday. These companies are Salesforce.com inc. (NYSE:CRM), ServiceNow Inc. (NYSE:NOW) and Republic Services Inc. (NYSE:RSG).
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At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 123% and beating the market by more than 66 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks.
Salesforce.com inc. (NYSE:CRM) has seen massive insider selling activity recently. Marc Benioff, who is the chairman and CEO of Salesforce, has been unloading his holding in the company at a high pace lately, selling 37,500 shares since the beginning of the current week. In addition to that, Parker Harris, one of the co-founders of Salesforce, has also sold 5,000 shares at prices of $72.42 and $73.50. Let’s not forget to mention the sell-off of 3,976 shares by Maria Martinez, who heads the teams that are actively engaged with Salesforce’s customers. The shares of the cloud computing company have grown by nearly 24% year-to-date and there are no signs that the company faces any troubles along its way. Just recently Salesforce has been heralded as a Leader in the 2015 Magic Quadrant for Mobile Application Development Platforms, which is a clear sign that the company provides a trustworthy app development platform for innovative companies all around the world. A recent study reveals that the usage of the Salesforce Platform generates 52% faster application deployment, 50% faster new application design, 52% faster application configuration and a 42% reduction in IT costs. Within our database, Christopher Lord’s Criterion Capital is the largest investor in salesforce.com inc. (NYSE:CRM) as of March 31, holding an ownership stake of 1.76 million shares.
Let’s now move on to ServiceNow Inc. (NYSE:NOW), which has also witnessed increased selling activity this week. Frederic B. Luddy, who is the founder and Chief Product Officer at ServiceNow, has unloaded 203,600 shares in his company this week. Meanwhile, David Schneider, the Chief Revenue Officer at the company, has sold 10,000 shares at prices that ranged from $76.74 to $78.48. The shares of ServiceNow have gained over 19% year-to-date and the gains are not likely to be over, as the company topped analysts’ expectations for its earnings in the second quarter of 2015. The enterprise cloud company posted non-GAAP net income of $7.3 million, or $0.04 per diluted share, compared to a non-GAAP net loss of $9.4 million, or a loss of $0.07 per diluted share, in the same quarter a year ago. At the same time, ServiceNow experienced a 68% year-over-year increase in the total number of customers, which is a clear sign that the company is on the right track. Within our database of over 700 hedge funds, Donald Chiboucis’ Columbus Circle Investors is the largest shareholder in ServiceNow Inc. (NYSE:NOW), with 2.53 million shares.
Last on our list is Republic Services Inc. (NYSE:RSG), in which two different corporate insiders reported sell-offs of the company’s stock this week. Donald W. Slager, who acts as the Chief Executive Officer and President at Republic Services, reported selling 59,850 shares at prices of $42.00 and $42.50. Republic Services also had its Executive Vice President and Chief Legal Officer, Michael P. Rissman, sell its stock this week. He sold 3,575 shares of the company for $41.99 each. The stock has grown by 6% since the beginning of 2015 and is currently trading at an all-time high. Just recently, Republic Services, an industry leader in recycling and non-hazardous solid waste collection in the United States, announced the addition of 17 Compressed Natural Gas (CNG) solid waste collection trucks to its existing fleet, which serves customers throughout the greater Denver area. This move clearly indicates that the company is keen on further developing its operations and activities. From the massive pool of hedge funds that we track, Mario Gabelli’s GAMCO Investors represents the largest shareholder in Republic Services Inc. (NYSE:RSG), owning 2.95 million shares.
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