Heavy Insider Selling at Prologis Inc. (PLD) and PRA Health Sciences Inc. (PRAH), Plus Insider Buying at 3 Other Companies

The U.S. Securities and Exchange Commission requires all publicly-traded companies’ officers, board members and shareholders to disclose any purchases or sales of shares of their companies. The individuals running a company usually have a competitive edge over non-insiders when it comes to trading that company’s securities, so the investment community should keep a close eye on both insider buying and selling activity.

Information is arguably the greatest commodity in the world and corporate insiders do have a great deal of information about their own companies. These highly-informed individuals hold more up-to-date and useful data related to their company’s operations and performance than journalists, analysts or investors. But it is not just the information advantage that makes insiders successful at trading securities. Their contrarian approach to investing, which follows the pattern of buying low and selling high, has been the key behind insiders’ investing success. Board members and executives are looking at the fundamentals of their business every day and can tell with great precision when their company’s prospects are improving or deteriorating. That said, the following article will discuss several noteworthy insider transactions reported with the SEC during the first trading day of the week.

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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Insider Buying Registered at Struggling Manufacturer of Railcars

One member of FreightCar America Inc. (NASDAQ:RAIL)‘s executive team purchased some shares this past week. Matthew S. Kohnke, Vice President of Finance, Chief Financial Officer and Treasurer, purchased 7,500 shares on Thursday at a weighted average cost of $14.07 per share, boosting his ownership to 9,500 shares.

The diversified manufacturer of railcars and railcar components has seen the value of its shares plummet by 24% since the beginning of the year. FreightCar America Inc. (NASDAQ:RAIL) posted consolidated revenue of $126.2 million for the second quarter, down from $235.6 million reported a year prior. The decrease was mainly driven by a lower number of railcars delivered, and was partially offset by a higher mix of new versus rebuilt railcars. The railcar deliveries for the second quarter were hit by production inefficiencies and supply chain delays. FreightCar America delivered 2,981 new railcars during the second half of 2016, compared to 2,512 new railcars delivered during the same period of 2015. Royce & Associates, founded by Chuck Royce, upped its stake in FreightCar America Inc. (NASDAQ:RAIL) by 72% during the second quarter, to 422,269 shares.

The second page of this article will reveal two companies with fresh insider buying, while the last page of the article will discuss the insider selling registered at two other companies.

New Director of Battered Biotherapeutics Company Purchases Shares

There was a massive insider purchase of Vital Therapies Inc. (NASDAQ:VTL) stock this past week, so let’s find out who stands behind the recent purchase. Faheem Hasnain, freshly-appointed member of the company’s Board of Directors, snapped up 118,243 shares on Friday at a price tag of $5.92 each. After the recent purchase, made in conjunction with joining Vital Therapies’ Board, Mr. Hasnain currently owns 122,743 shares.

The biotherapeutics company focused on developing a human hepatic cell-based treatment targeting acute forms of liver failure has seen the value of its shares decline by 45% since the start of the year. Vital Therapies Inc. (NASDAQ:VTL) developed the ELAD System, an extracorporeal human allogeneic cellular liver therapy designed to enable a patient’s own liver to regenerate to a healthy state or stabilize a patient until transplant. In the final quarter of 2015, the company started a new Phase 3 clinical trial to evaluate the ELAD System in subjects with severe acute alcoholic hepatitis. D.E. Shaw & Co. L.P., founded by David E. Shaw, owns 46,667 shares of Vital Therapies Inc. (NASDAQ:VTL) as of June 30.

Board Member of Tim Hortons and Burger King Owner Buys Shares

Restaurant Brands International Inc. (NYSE:QSR) was yet another company that had some insider buying last week. Board member Ali Hedayat bought 5,000 shares on Thursday at prices ranging from $47.72 to $47.75 per share. Following the recent purchase, Mr. Hedayat currently owns 20,000 shares.

The quick service restaurant company that owns the Tim Hortons and Burger King brands has seen its market cap jump by 27% since the beginning of the year. Restaurant Brands International Inc. (NYSE:QSR)’s Burger King recently rolled out a hamburger-burrito hybrid called Whopperrito that features its own interpretation of the Tex-Mex trend. The burger chain’s Whopperrito is a mashup of a burrito and its popular Whopper. This represents the company’s latest experiment with unique offerings to lure back consumers who have been cutting back on their fast food dining. There were 31 hedge funds in our system with long positions in the fast-food chain at the end of March, accumulating 32% of the company’s outstanding shares. Aaron Cowen’s Suvretta Capital Management reported ownership of 3.37 million shares of Restaurant Brands International Inc. (NYSE:QSR) in its latest 13F filing.

The final page of this article will discuss the noteworthy insider selling registered at two other companies.

Notable Insider Selling Registered at Global Contract Research Organization

A member of PRA Health Sciences Inc. (NASDAQ:PRAH)‘s executive team offloaded a sizable block of shares at the end of the previous week. David W. Dockhorn, Executive Vice President and Compliance Officer, discarded his entire 107,257-share stake on Friday for $49.00  per share.

The shares of the global contract research organization that provides outsourced clinical development services to the biotechnology and pharmaceutical industries are 13% in the green thus far in 2016. PRA Health Sciences Inc. (NASDAQ:PRAH) reported service revenue of $394.2 million for the second quarter of 2016, an increase of 17.2% year-over-year. The increase was mainly attributable to an increase in billable hours, as well as changes to the contract pricing terms on the company’s mix of active studies. Marshall Wace LLP, founded by Paul Marshall and Ian Wace, was the owner of around 900,000 shares of PRA Health Sciences Inc. (NASDAQ:PRAH) at the end of the second quarter.

Insider Selling at Leading Warehouse Owner

An executive at Prologis Inc. (NYSE:PLD) also discarded a chunk of his stake this past week. Gary E. Anderson, the Chief Executive Officer of Europe and Asia since June 2011, sold out of his entire stake of 33,043 common shares on Friday at prices varying from $54.25 to $54.29 per share. Mr. Anderson now holds 1,663 shares of Prologis through his 401(k) plan, as well as 100,000 Restricted Stock Units (RSU’s) that have vested, and an additional 412,666 RSU’s that have yet to vest.

The global leader in logistics real estate has seen its market value increase by 25% since the beginning of January. Prologis Inc. (NYSE:PLD), the world’s biggest warehouse owner, had core funds from operations, the benchmark for measuring profitability of real estate investment trusts (REIT’s), of $324 million for the second quarter, up from $274 million reported a year earlier. The REIT’s second quarter revenue rose to $602 million from $510 million posted in the same period of the prior year. The company’s strategy involves investing in logistics facilities in the world’s primary population centers, as well as facilities supported by extensive transportation infrastructure. Israel Englander’s Millennium Management LLC has 1.02 million shares of Prologis Inc. (NYSE:PLD) among its holdings as of the end of June.

Disclosure: None