Insider Selling Reported At FedEx Corporation (FDX), Weyerhaeuser Co (WY), And Others

All major U.S. stock indexes closed in the green on Monday, after suffering significant losses following the Federal Reserve’s decision to raise interest rates. Although the Fed finally brought the much-awaited rate hike, many anticipate that the uncertainty around the pace of rate increases is not likely to fade away in the upcoming year. Meanwhile, some companies’ corporate insiders have been selling shares ahead of the two shortened trading weeks, which might suggest grim prospects at those companies in the forthcoming future. Investors should be careful when analyzing insider selling activity, as insiders usually sell shares for a wide range of reasons unrelated to their companies’ future prospects. The Insider Monkey team pinned down several noteworthy insider sales reported at three companies, so this article mainly discuses those trades and the performance of the three companies.

Prior to discussing the insider trading activity, let’s make you familiar with what Insider Monkey does. We track hedge funds and prominent investors because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 50 most popular large-cap stocks among hedge funds had a monthly alpha of about 6 basis points per month between 1999 and 2012; however the 15 most popular small-cap stocks delivered a monthly alpha of 80 basis points during the same period. This means investors would have generated 10 percentage points of alpha per year simply by imitating hedge funds’ top 15 small-cap ideas. We have been tracking the performance of these stocks since the end of August 2012 in real time and these stocks beat the market by 53 percentage points (102% return vs. S&P 500’s 48.7% gain) over the last 38 months (see the details here).

Alexandria Real Estate Equities Inc. (NYSE:ARE) had two influential insiders sell shares last week. Founder, Chairman, and Chief Executive Officer Joel S. Marcus sold 4,000 shares on Thursday at a weighted average price of $90.91, trimming his holding to 596,316 shares. Chief Investment Officer Peter M. Moglia offloaded 5,000 shares last Tuesday at prices that ranged from $89.90-to-$89.97 per share. After the recent sell-off, the CIO holds 63,167 shares. The shares of this self-managed urban office REIT that mainly focuses on collaborative science and technology campuses are up nearly 3% this year. The REIT generated total revenue of $619.5 million for the first nine months of 2015, which denoted an increase of $81.3 million or 15.1% year-on-year. Alexandria Real Estate Equities Inc. (NYSE:ARE) has a leverage ratio of 39.5% as of September 30, which is substantially lower than the requirement of the key financial covenants under its unsecured senior line of credit and unsecured senior bank term loans. The management’s expertise in highly desirable locations for tenancy by science and technology entities is what differentiates this REIT from other companies in the industry. The number of smart money investors from our database with positions in the REIT climbed to 22 from 14 during the third quarter. Jeffrey Furber’s AEW Capital Management cut its stake in Alexandria Real Estate Equities Inc. (NYSE:ARE) by 8% during the July-to-September period, ending the quarter with 254,400 shares.

The second page of this article discusses the insider sales reported at FedEx Corporation (NYSE:FDX) and Weyerhaeuser Co (NYSE:WY).

FedEx Corporation (NYSE:FDX) also witnessed some insider selling this past week. President and Chief Executive Officer of FedEx Express David J. Bronczek reported selling 39,499 shares on Friday at a weighted average price of $148.71, after 26,632 non-qualified stock options were exercised. The CEO also offered 4,130 shares as a bona-fide gift on the same day. Following these recent transactions, the Executive currently holds a direct ownership stake of 52,280 shares. The shares of this package-delivery company are 16% in the red year-to-date, but the stock trades at a very appealing forward P/E ratio of 12.13 (assuming that analysts’ earnings estimates are accurate). This compares with the average of 17.19 for the companies included in the S&P 500 Index. FedEx reported average daily package volume of 11.89 million packages for the second quarter of 2016 that ended November 30, up from 11.18 million reported a year ago. It should be mentioned that the company’s fuel expenses for the first half of 2016 dropped 39% year-on-year as a result of lower aircraft fuel prices. It is widely known that December represents the busiest month of the year for package-shipping companies, so it remains to see how FedEx manages to capitalize on the increased activity in the e-commerce space. A total of 53 hedge funds from our database had the company in their portfolios at the end of the third quarter, accumulating 10.20% of its stock. Mason Hawkins’ Southeastern Asset Management holds 6.39 million shares of FedEx Corporation (NYSE:FDX) as of September 30.

Let’s conclude our discussion by looking into the insider selling activity at Weyerhaeuser Co (NYSE:WY). Senior Vice President Denise M. Merle reported selling 2,580 shares on Thursday at prices in the range of $30.74 and $30.75 per share, and currently holds 19,990 shares. The real estate investment trust (REIT) that generates income from investments in timberlands has seen its stock decline by 17% this year. In the meantime, the stock trades at a rather expensive trailing P/E ratio of 27.24. At the beginning of November, Weyerhaeuser and Plum Creek Timber Co. Inc. (NYSE:PCL), a timber, land and forest products company, sealed a merger agreement under which Plum Creek shareholders were set to receive 1.60 shares of Weyerhaeuser for each share of Plum Creek. The recovery pace of the U.S. housing market positively correlates with some of Weyerhaeuser’s business segments, so it can be expected that the company will generate strong growth in the upcoming year if considering the current employment growth, strengthening consumer confidence and low mortgage rates. However, the declining export demand from China and Japan is anticipated to weight on the company’s operations. John Khoury’s Long Pond Capital added a 2.35 million-share position in Weyerhaeuser Co (NYSE:WY) to its portfolio during the third quarter.

Disclosure: None