The dollar volume of insider selling has been on the rise over the past several weeks, with voluminous insider selling at Facebook Inc. (NASDAQ:FB) and Apple Inc. (NASDAQ:AAPL) accounting for a high portion of this week’s overall volume of insider sales activity. Nonetheless, a lot of insider selling activity, including what was observed at the social networking giant and the iPhone maker this week, was connected with either freshly-exercised stock options or pre-arranged trading plans. Numerous corporate insiders use pre-arranged 10b5-1 trading plans to diversify their holdings, as these trading plans offer a convenient way to sell shares without worrying about possible securities fraud charges. Insider Monkey avoids examining transactions conducted under trading plans, instead focusing on only spur-of-the-moment insider purchases and sales. A fresh study concludes that spontaneous or so-called opportunistic insider trades tend to generate higher returns than those conducted under trading plans. With that in mind, the following article will examine the insider selling activity recently registered at three companies.
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HollyFrontier Corp (NYSE:HFC) had one of its most influential executives offload shares this past week. Executive Chairman Michael C. Jennings discarded 35,000 shares last Tuesday at prices varying from $35.48 to $35.64 per share, trimming his overall holding to 177,169 shares. In late February, Mr. Jennings also unloaded 100,000 shares at prices that fell between $32.98 and $34.41 per share. HollyFrontier is an independent petroleum refiner that produces various refined products such as gasoline, diesel fuel, jet fuel, specialty lubricant products, and specialty and modified asphalt. The company owns and operates refineries that have a combined crude oil processing capacity of 443,000 barrels per day, serving markets throughout the Mid-Continent, Southwest, and Rocky Mountain regions of the United States.
HollyFrontier Corp (NYSE:HFC)’s sales and other revenue for 2015 declined to $13.24 billion from $19.76 billion in 2014. The large decrease in the company’s 2015 top-line figure was primarily driven by a decrease in sales prices, partly offset by higher refined product sales volumes. More importantly, net income for 2015 reached $740.10 million, or $3.91 per basic share, increasing from $281.29 million, or $1.42 per basic share, reported for 2014. The increase was mainly attributable to higher refining margins and sales volumes, as well as enhanced operational reliability and lower operating expenses. The company’s refinery gross margins increased to $16.07 per produced barrel in 2015 from $13.98 in 2014.
Just recently, analysts at Goldman Sachs downgraded HollyFrontier to ‘Sell’ from ‘Neutral’ and lowered their price target on it to $34 from $37, citing expectations of low crude oil differentials, premium valuation as compared to other refiners and possible 22%-to-26% downside to consensus earnings per share. Even so, some analysts and investors believe that HollyFrontier’s stock performance was pressured by lower crude oil prices, which created good entry points. The shares of the petroleum refiner are down by 8% in the past 12 months and change hands at 9.0-times expected earnings, below the forward P/E ratio of 10.3 for the Oil and Gas Refining and Marketing industry. The number of hedge funds in our system with stakes in the company declined to 34 from 40 during the December quarter. Israel Englander’s Millennium Management reported ownership of 4.59 million shares of HollyFrontier Corp (NYSE:HFC) through its 13F for the final quarter of 2015.
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On the next two pages of this insider trading article we’ll examine the insider selling registered at Eastgroup Properties Inc. (NYSE:EGP) and Hormel Foods Corp (NYSE:HRL).
