Insider Selling Metric Highlights 3 Stocks Approaching Fair Valuations

CACI International Inc. (NYSE:CACI) had a few insiders discard shares in the past two weeks. To begin with, President and Chief Executive Officer Kenneth Asbury dumped half of his stake on Wednesday, at a price of $93.80 per share, remaining with 25,264 shares. Director Warren R. Phillips unloaded 1,065 shares on February 16 at a price of $94.92 per unit, cutting his overall holding to 4,935 shares. The Director was granted 1,230 restricted stock units in November 2015 that automatically convert into 1,230 shares of common stock on a one-for-one basis (307 shares on February 17, 308 shares on May 17, 307 shares on August 15, and 308 shares on November 13).

The provider of computer services to intelligence and defense agencies has seen its stock advance by 8% over the past 52 weeks despite experiencing a serious pullback from the beginning of December through the end of January. CACI International generated total revenue of $1.65 billion during the six months that ended December 31, up by 1.4% year-over-year. The increase was mainly attributable to an increase in investigations and litigation support and business systems contracts. It should be noted that revenue from contracts with U.S government agencies accounted for 93.5% of the company’s total revenue during the second half of last year. Meanwhile, the shares of CACI are trading at 14.71-times expected earnings, slightly below the forward P/E multiple of 15.00 for the Information Technology industry. Hence, it appears that the “fair valuation” theory is legitimate in this case. A total of 15 hedge funds tracked by Insider Monkey were invested in the company at the end of the fourth quarter, amassing 3.70% of its common stock. Ken Griffin’s Citadel Advisors owns 275,158 shares of CACI International Inc. (NYSE:CACI) as of December 31.

The insider buying activity at Campbell Soup Company (NYSE:CPB) has been nonexistent in recent years, whereas the volume of insider selling has been gaining weight at a high pace. Senior Vice President and Chief Human Resources Officer Robert W. Morrissey sold 24,158 shares on Friday at $62.52 apiece, trimming his stake to 71,691 shares. The shares of the manufacturer and marketer of branded convenience food products have advanced by 32% over the past year and trade near their all-time high reached in 1998. Just recently, analysts at Credit Suisse reiterated their ‘Underperform’ rating on the stock and increased the price target on it to $60 from $57, after the canned soup maker released its second-quarter results for fiscal year 2016. However, analysts and investors are anticipating of a pullback for the stock, as the average price target among the 19 analysts covering the stock is approximately $59 per share, below its current price.

Campbell Soup Company generated $4.40 billion in sales during the first half of fiscal year 2016 ended January 31, down by 2% year-over-year, due to currency translation impact and lower volume. Meanwhile, the stock is priced at 19.79-times expected fiscal year 2017 earnings, below the forward P/E multiple of 21.00 for the Packaged Foods industry and significantly above the 16.15 multiple of the S&P 500 Index. Even though the recent insider selling should not be seen as a bearish signal, the upside potential for the stock appears to be limited at the moment. There were 15 hedge funds in our system with stakes in the company at the end of December compared with 18 registered at the end of the third quarter. Israel Englander’s Millennium Management had 374,279 shares of Campbell Soup Company (NYSE:CPB) in its portfolio at the end of 2015.

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