Insiders Are Fleeing IHS Markit Ltd (INFO) and Medtronic PLC (MDT), Plus Insider Buying at 3 Companies

Rightfully assuming corporate insiders know a lot more about their company’s prospects and recent developments than any of us, investors would be wise to keep a close eye on how insiders are trading their company’s shares. These highly-informed individuals are way ahead of analysts and portfolio managers, which is why their purchases have been shown to have outperformed broader market benchmarks on aggregate. However, retail investors should not attempt to blindly mimic each insider move, as outsiders need to consider the underlying factors that dictate the timing of insiders’ transactions.

Most insiders sell shares for diversification or liquidity needs, the kind of insider selling that should not worry investors. Nevertheless, by watching the trading activity of corporate insiders, investors can get a better sense of a stock’s prospects. Insider Monkey processed the majority of Form 4 filings submitted with the SEC on Tuesday and identified five companies that registered noteworthy insider trading activity.

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).

Online Retailer’s Freshly-Resigned President Buys Shares

Overstock.com Inc. (NASDAQ:OSTK) had one of its most influential executives purchase a sizable block of shares last week. Stormy D. Simon, who recently announced that she would resign from her position as the President of the online retailer by July 25, snapped up 70,000 shares on Friday at a price tag of $16.96 each. Ms. Simon, who will remain a member of the company’s Board until no later than September 30, currently holds an ownership stake of 147,417 shares.

The online retailer offers a broad portfolio of price-competitive brand name, non-brand name and closeout products, and has seen its market value jump by 34% since the start of 2016. Overstock.com Inc. (NASDAQ:OSTK)’s overall revenue growth has been slowing since mid-2015, partially due to changes Google has made to its natural search engine algorithms. As a result, the online retailer has increased its focus on other marketing channels such as sponsored search, which has led to higher revenue growth, as well as higher marketing expenses than through natural search. Prem Watsa’s Fairfax Financial Holdings owned 3.18 million shares of Overstock.com Inc. (NASDAQ:OSTK) at the end of March.

Insider Buying at Operator of Private Golf and Country Clubs

ClubCorp Holdings Inc. (NYSE:MYCC) saw a member of its Board of Directors buy some shares earlier this week. Board member Margaret M. Spellings acquired 1,000 shares on Tuesday at $14.76 apiece, lifting her ownership stake to 10,719 shares.

The insider buying comes shortly after the leading owner-operator of private golf and country clubs released its financial results for its second quarter of fiscal year 2016 ended June 14. ClubCorp Holdings Inc. (NYSE:MYCC) has lost 21% of its market value in 2016, partially owing to a “short” investment thesis outlined by Kerrisdale Capital Management in April. The private investment firm said “golf participation, golf rounds played, and sales of golf equipment have all trended down over the past decade, while the age of the average golfer has trended up”; demographic pressures that strain the entire industry and ClubCorp in particular. Kerrisdale Capital’s discounted cash flow model values ClubCorp’s stock at just $2.75 per share, which implies 81% downside. Ken Griffin’s Citadel Advisors LLC had 1.13 million shares of ClubCorp Holdings Inc. (NYSE:MYCC) among its holdings on March 31.

The next page of this article will reveal several noteworthy insider transactions registered at three other companies.

Clinical-Stage Immunotherapy Company Registers Insider Buying Amid Stock Price Weakness

Immune Design Corp (NASDAQ:IMDZ) recently witnessed the first insider buying of its shares in 2016, so let’s find out who stands behind the recent purchase. Stephen R. Brady, Executive Vice President of Strategy and Finance, snatched up 1,500 shares on Friday for $6.84 each. After the recent purchase, Mr. Brady currently owns 17,132 shares.

The shares of the clinical-stage immunotherapy company are down by 65% since the beginning of 2016. Immune Design Corp (NASDAQ:IMDZ) develops technologies to activate the immune system’s natural ability to create tumor-specific cytotoxic T cells to fight cancer. Earlier this year, the FDA granted orphan drug designation in soft tissue sarcoma for both components of the company’s primary product candidate CMB305, both for its “prime boost” cancer immunotherapy product candidate and for CMB305 itself. Orphan drug designations offer certain benefits such as waivers of certain regulatory fees, but do not provide assurance of regulatory approval or speed up the regulatory review process. Baker Bros. Advisors, run by Julian Baker and Felix Baker, had nearly 149,000 shares of Immune Design Corp (NASDAQ:IMDZ) in its portfolio at the end of the first quarter.

Massive Insider Selling at Data and Business Research Provider After Freshly-Completed Merger

IHS Markit Ltd (NASDAQ:INFO) recently witnessed two executives unload sizable blocks of shares. To begin with, Jonathan Gear, Executive Vice President of Resources and Transportation, discarded 15,000 shares on Friday at $36.00 apiece, cutting his ownership to 319,287 shares. More importantly, Chairman and CEO Jerre L. Stead offloaded 32,000 shares on Friday and 38,000 shares on Monday at prices between $34.91 and $35.26 per share. Following the recent transactions, Mr. Stead holds a direct ownership stake of 805,380 shares.

Earlier this month, U.S information and analytics provider IHS Inc. and U.K.-based market-data company Markit Ltd. completed their all-stock merger agreement reached in late March, creating a $13 billion London-based data and business research provider. The newly-created company, called IHS Markit Ltd., is set to pay a corporate tax rate in the low-to-mid 20% range, significantly below the rate of 35% paid by U.S companies. IHS Markit has an 11-person Board comprised of senior management from the two companies. Mr. Stead, previously the CEO of IHS, serves as the CEO of the combined company.

Medical-Device Maker Registers More Insider Selling

Medtronic PLC (NYSE:MDT) also registered some insider selling this past week. Geoffrey Martha, Executive Vice President and President of the Restorative Therapies Group at Medtronic, offloaded 3,766 shares on Friday for $88.26 each, trimming his stake to 26,273 shares.

The medical-device company has seen its market capitalization gain 14% so far in 2016, with the company’s stock having advanced by 145% over the past five years. This strong performance partially explains the recent surge in insider selling at the company. In late June, Medtronic PLC (NYSE:MDT) announced that it was acquiring HeartWare International Inc. (NASDAQ:HTWR) for $1.1 billion, a deal that will expand the medical-device maker’s existing portfolio by adding more heart-treatment products. HeartWare shareholders will receive $58 in cash for each HeartWare share owned. HeartWare develops the HVAD heart pump, a mechanical pump implanted in patients suffering from advanced heart failure. Ken Fisher’s Fisher Asset Management owns a mere 4,716 shares of Medtronic PLC (NYSE:MDT) as of the end of June.

Disclosure: None