High-Flying U.S. Shale Producer and Two Other Companies Register Heavy Insider Selling

Last week’s dollar value of insider selling fell by 60% week-over-week, which might seem like great news for the investment community. With the United Kingdom’s highly-scrutinized referendum held last Thursday, one might have anticipated insider selling to skyrocket ahead of this extremely important event. But that did not happen. Surprisingly, Britons decided to leave the European Union, a decision that added a lot of uncertainty in financial markets (as if there wasn’t enough uncertainty already).

While there is no doubt that insider buying usually conveys positive information, the interpretation of insider selling is much more complicated. Corporate insiders, namely Board members and executives, sell shares in their own companies for a wide range of reasons, most of which do not have anything to do with their companies’ current developments or future prospects. However, this does not necessarily mean that insiders are selling shares randomly; they usually sell high and buy low. It is their contrarian approach to investing which led past studies suggest that corporate insiders are quite good at trading securities. With that in mind, the following article will lay out a list of three companies that had their insiders report equity sales with the SEC on Friday, when global markets crushed following Britons’ decision to leave the European Union.

Through extensive research, we have determined that the due diligence that the investors in our database employ, as well as their long-term focus makes them perfect targets to emulate. However, the results of our analysis have also shown that the small-cap picks of these funds can generate much better returns, with the 15 most popular small-cap stocks beating the market by an average of 95 basis points per month (read more details here).

Corepics VOF/Shutterstock.com

High-Flying REIT Registers Increased Insider Selling

Duke Realty Corp (NYSE:DRE) has seen two executives sell big this June, so let’s have a look at the most recent activity. Steven R. Kennedy, Executive Vice President of Construction, reported selling 26,649 shares on Thursday at $25.41 apiece, all of which were held by the Steven R. Kennedy Revocable Trust that continues to own 5,300 shares. Mr. Kennedy also holds a direct ownership stake of 42,691 shares. Earlier this month, Executive Chairman Dennis D. Oklak sold 75,000 shares for $24.41 each, cutting his stake to 305,444 shares.

The real estate investment trust owing or jointly controlling 538 industrial and medical office properties has seen its market value jump by 20% since the beginning of 2016, so it may be a good idea for Duke Realty’s insiders to diversify given the high uncertainty in financial markets at the moment. Duke Realty Corp (NYSE:DRE)’s funds from operations (FFO) for the first quarter of 2016 were $92.09 million, down from $114.37 million recorded a year ago. The REIT’s decision to use the proceeds from dispositions conducted in 2015 to reduce leverage and re-invest in developing properties impacted the FFO figure.

The REIT currently pays out a quarterly distribution of $0.18 per share, which yields 2.84% annually. The hedge fund sentiment towards Duke Realty increased during the first quarter of 2016, as the number of funds from our system with stakes in the REIT spiked to 12 from nine quarter-over-quarter. Ken Griffin’s Citadel Advisors LLC was the owner of nearly 195,000 shares of Duke Realty Corp (NYSE:DRE) at the end of March.

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

Closed-End Investment Company Trading Below Net Asset Value Registers Insider Selling

General American Investors Co. Inc. (NYSE:GAM) has registered voluminous insider selling in recent weeks. Board member Arthur G. Altschul discarded an aggregate of 5,494 shares on Wednesday and Thursday at a weighted average price of $31.28 per share, cutting his entire ownership stake to 102,440 shares. All those freshly-sold shares were held through various trust funds. Spencer Davidson, Chairman of the company’s Board and former CEO, sold 5,600 shares on Wednesday for $31.01 each and 20,000 shares a day later at $31.33 apiece, all of which were held by trust funds. Mr. Davidson owns 961,543 shares that are held by Hudson Partnership, in which the Chairman is the General Partner, along with an additional indirect ownership stake of 194,408 shares held through various trust funds.

The closed-end investment company has seen the value of its shares drop by 5% since the beginning of the year. General American Investors Co. Inc. (NYSE:GAM)’s primary objective involves long-term capital appreciation through investing in companies with above average growth potential. The company’s net asset value per share decreased by 2.8% over the past year that ended March 31, whereas the S&P 500 Index gained 1.8% over the same time span. The closed-end investment company’s net asset value per share was $37.71 on March 31, sporting a 17.2% discount to the actual value of its shares. John A. Levin’s Levin Capital Strategies had 24,869 shares of General American Investors Co. Inc. (NYSE:GAM) in its portfolio on March 31.

Strong Performing Crude Oil and Natural Gas Company Registers Heavy Insider Selling

Continental Resources Inc. (NYSE:CLR) has witnessed four different insiders sell shares so far in June, so let’s take a look at the fresh activity only. To begin with, Eric S. Eissenstat, Secretary, Chief Risk Officer and General Counsel, offloaded 10,000 shares on Thursday at prices varying from $45.34 to $45.39 per share, trimming his ownership to 163,136 shares. Glen A. Brown, Senior Vice President of Exploration, sold 8,977 shares last Monday at prices that fell between $43.09 and $43.26 per share. After the not-so-distant sale, Mr. Brown continues to own 136,113 shares.

The independent crude oil and natural gas company has seen its market capitalization skyrocket by 89% since the start of 2016. Continental Resources Inc. (NYSE:CLR)’s operations are mainly focused on exploration and development activities in the Bakken field of North Dakota and Montana, as well as the SCOOP, STACK, and Northwest Cana areas of Oklahoma. Just recently, analysts at Canaccord Genuity raised their price target on the U.S. shale producer to $50 from $44 and reiterated their “Buy” rating on the stock, saying that “CLR is the largest leaseholder in the Williston Basin (WB) and a pioneer in the development of the SCOOP and STACK plays in Oklahoma, where it also the largest and most active leaseholder, is achieving impressive results, and has considerable upside that we do not believe is reflected in the stock price”. The company is also anticipated to complete drilled and uncompleted wells in the Williston Basin should crude oil prices remain in the range of $45 to $50 per barrel.

The number of asset managers followed by Insider Monkey with long positions in the crude oil and natural gas company increased to 50 from 34 during the March quarter. John Labanowski’s Brenham Capital Management acquired a new stake of 3.00 million shares of Continental Resources Inc. (NYSE:CLR) during the January-to-March period.

Disclosure: None