Insiders at Murphy USA Inc. (MUSA) Keep Buying Shares, Noteworthy Insider Selling at Iconic Harley-Davidson Inc. (HOG), and Other Insider Trading

Heavy insider buying is usually interpreted as a bullish signal within the investment community because there’s only one reason corporate insiders are buying shares in their own companies (okay, two reasons – some corporate insiders are required to purchase securities to meet stock ownership guidelines). Unlike many indicators based on historical data, insider buying serves as a forward-looking indicator. Most of the time, insider purchases show that corporate insiders believe their company’s stock is worth much more than the price tag set by the invisible hand of Mr. Market and they tend to be accurate on most occasions.

Past research, analysts and insider trading experts suggest that clusters of insider buying are significantly more informative than single buys. A herd of insiders buying shares is a much better signal than a “lone wolf” who could be wrong. However, it’s not too hard to find securities in which corporate insiders made buys at significantly higher prices than current ones, which means insiders could also misjudge the market or their company’s fundamentals. It does not seem to be a great idea to put emphasis on insider trading alone, as this practice could make investors overlook fundamental flaws and warning signs. So one could easily arrive at the conclusion that investors should attempt to incorporate insider trading metrics into their own stock selection and analysis process rather than trade on insider trading alone. With that in mind, let’s discuss a set of noteworthy insider transactions reported with the SEC on Monday.

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Insiders at Convenience Store Operators Keep Buying Shares

After two insiders at Murphy USA Inc. (NYSE:MUSA) purchased shares at the beginning of the previous week, an additional insider opted for boosting his equity stake on Friday. Board member David B. Miller snapped up 15,298 shares on Friday at a price tag of $65.37 each. Mr. Miller currently owns a total of 35,298 shares after the purchase.

The shares of the marketer of retail motor fuel products and convenience merchandise are 5% in the green so far in 2017. The bulk of insider buying comes after Murphy USA Inc. (NYSE:MUSA) released its financial results for the three and twelve months that ended December 31. The company’s net income rose to $221.5 million in 2016 from $176.3 million in 2015 despite operating in the weakest retail fuel margin environment since 2010. The jump in insider buying at Murphy USA is not necessarily surprising, especially when bearing in mind that the company’s shares are down by 13% in the past six months. Ken Griffin’s Citadel Advisors LLC reported owning around 131,000 shares of Murphy USA Inc. (NYSE:MUSA) through the 13F filing for the fourth quarter.

The discussion on the next page of the article revolves around some noteworthy insider buying at two other companies.

CEO of Largest U.S. Theater Operator Buys Shares Via Public Offering to Support Acquisitions-Led Growth Strategy

The most influential and important exec at AMC Entertainment Holdings Inc. (NYSE:AMC) piled up some shares this week. President and Chief Executive Officer Adam M. Aron snatched up 31,747 Class A shares on Monday at a price of $31.50 per share, a purchase that lifted his ownership to 51,747 shares. The CEO purchased the shares via an underwritten public offering, through which the company aimed to raise capital to repay outstanding bridge loans incurred in connection with the completed acquisition of Carmike Cinemas Inc. and use remaining proceeds to finance another freshly-announced acquisition.

Earlier this year, AMC Entertainment Holdings Inc. (NYSE:AMC), the largest movie exhibition company in the United States, agreed to buy Stockholm-based Nordic Cinema Group Holding AB for $929 million in cash. Nordic Cinema represents the largest cinema chain in the Nordic and Baltic countries and operates 68 theaters in around 50 cities. Credit analysts at Moody’s were not overly impressed with AMC’s plans to buy the largest theater chain in northern Europe (AMC plans to finance the deal with a mix of loans, debt and equity), as Moody’s put AMC on review for a downgrade. The company’s debt is currently rated B1, a highly speculative level on Moody’s ratings scale. The acquisition is anticipated to be closed by the end of June. Jim Simons’ Renaissance Technologies LLC was the equity holder of 1.24 million shares of AMC Entertainment Holdings Inc. (NYSE:AMC) at the end of December.

Board Member of Oilfield Services Companies Buys Shares

One member of Halliburton Company (NYSE:HAL)’s boardroom purchased some shares last week as well. Murry S. Gerber, who joined the company’s Board of Directors in January 2012, bought 5,350 shares on Friday at $57.11 apiece, along with an additional 40 shares for $56.96 each. Mr. Gerber currently owns an aggregate of 51,450 shares following these transactions.

Given that North American oil and gas companies have started boosting production again as crude oil prices seem to be stabilizing above $50 per barrel, analysts believe Halliburton Company (NYSE:HAL) represents the best-positioned oilfield services company to benefit from this development. Let us remind you that Halliburton paid Baker Hughes Incorporated (NYSE:BHI) a termination fee of $3.5 billion after terminating their merger agreement in late April 2016 due to challenges in obtaining regulatory approvals and unfavorable industry conditions, which significantly damaged deal economics. Halliburton shares are up 88% in the past year. Richard S. Pzena’s Pzena Investment Management owned 2.44 million shares of Halliburton Company (NYSE:HAL) at year-end.

Let’s head to the final page of the article, where we discuss fresh insider selling observed at two other companies.

Board Member at Iconic Heavyweight Motorcycle Manufacturer Sell Massive Block of Shares

One member of Harley-Davidson Inc. (NYSE:HOG)’s Board of Directors offloaded a sizeable block of shares last week, though there were additional minor sales completed by several insiders. Board member Donald A. James liquidated 100,000 shares on Friday at prices ranging from $56.74 to $57.15 per share, shares held by Fred Deeley Limited. Mr. James currently holds an indirect ownership stake of 211,788 shares via Fred Deeley Limited, along with an additional direct ownership stake of 5,522 shares.

The iconic heavyweight motorcycle manufacturer has seen its market capitalization jump by 43% in the past year. Harley-Davidson Inc. (NYSE:HOG) recently said motorcycle shipments for 2016 fell short of estimates due to strong global competition. The motorcycle maker said dealers in the United States had too many 2016 models at the end of the December quarter, thus forcing the company to limit shipments of its 2017 models. As a result, the company anticipates shipments for 2017 to be flat to down modestly compared to the previous year. Harley-Davidson, which holds around 51.2% of the U.S. big-bike market, has been focusing on selling 2016 motorcycles during the first quarter of this year. William Von Mueffling’s Cantillon Capital Management had 5.46 million shares of Harley-Davidson Inc. (NYSE:HOG) in its portfolio at the end of December.

Insiders at Network Technology Vendor Sell Shares After Providing Mediocre Guidance

There was some prominent insider selling at F5 Networks Inc. (NASDAQ:FFIV) this past week as well. Jonathan Chadwick, who joined the company’s Board of Directors in August 2011, sold 3,954 shares last Tuesday at $137.00 apiece, trimming his ownership to 6,229 shares. The man in charge of the company offloaded a much larger block of shares on Friday, but the transaction was conducted under a pre-arranged trading plan (we avoid insider transactions made under pre-arranged trading plans, as we believe decisions made in the past on when to buy or sell shares are not as informative as spontaneous insider transactions).

The shares of the networking technology vendor are down 3% since the beginning of the year, mainly reflecting a slump after the management provided an outlook that was slightly light compared to what analysts had anticipated. F5 Networks Inc. (NASDAQ:FFIV)’s revenue for the three months that ended December rose 5.4% year-on-year to $516 million. The network services provider anticipates revenue for the current quarter to fall in the range of $518 million to $528 million. However, considering that the company’s shares have gained 56% in the past year, the small jump in insider selling should not surprise the investment community. Philippe Laffont’s Coatue Management held its position in F5 Networks Inc. (NASDAQ:FFIV) unchanged during the fourth quarter of 2016 at around 821,000 shares.

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