Insiders at Strong Performing Orthodontic-Device Maker, Pinnacle Foods Inc. (PF), and Aetna Inc. (AET) Offload Shares, Plus Insider Buying at Other Companies

In a rather recent study on insider trading, several researchers from top-tier U.S. universities split insider trading into two groups: routine insider trading that does not convey meaningful information; and information-rich insider trading that contains strong predictive power. While only a small portion of the overall insider buying activity can be considered routine, most insider selling does not seem to convey meaningful information to the investment community. After all, most insider selling is driven by diversification or liquidity reasons, so insider trading watchers should be extremely careful when interpreting insider selling.

As mentioned above, a small portion of insider buying could be viewed as routine as well. Specifically, the insider purchases conducted by freshly-appointed board members or executives to meet stock ownership guidelines implemented by most publicly traded companies represent routine transactions. Turning our attention to the study mentioned above, the researches found that the routine trades were associated with zero abnormal returns, whereas the information-rich transactions, referred in the study as opportunistic, yielded value-weighted abnormal returns of 82 basis points per month. All in all, one conclusion that can be drawn from the study discussed above is that investors can use insider trading data and information to make better, smarter investment decisions. That being said, let’s have a look at a set of notable insider transactions reported with the SEC on Tuesday.

At Insider Monkey, we track around 750 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details).

Nonwarit/Shutterstock.com

CEO of Boutique Investment Bank Piles Up Shares

Let’s kick off our discussion by looking into the insider buying observed at PJT Partners Inc. (NYSE:PJT), where the most well-informed and influential executive purchased a great deal of shares this week. Chairman and CEO Paul J. Taubman snapped up 34,211 Class A shares on Monday at prices varying from $29.50 to $29.75 per share, along with an additional 789 Class A shares that were bought on Tuesday at a weighted average price of $29.65 per share. Following the recent transactions, Mr. Taubman currently owns an aggregate of 400,000 shares.

The advisory-focused investment bank has seen its market capitalization jump by 5% since the beginning of the year. PJT Partners Inc. (NYSE:PJT) reported total revenues of $121.3 million for the September quarter, a decrease of $26.0 million relative to the same period of the previous year. The decrease in the boutique investment bank’s top-line figure mainly reflects a decrease in advisory fees due to an overall drop in the size of transactions closed during the quarter. The decrease in strategic advisory activity was somewhat offset by a jump in restructuring and special situations activity. Israel Englander’s Millennium Management added a 230,520-share stake in PJT Partners Inc. (NYSE:PJT) to its portfolio of holdings during the third quarter.

The next two pages of this article will discuss other insider transactions reported with the SEC on Tuesday.

Board Member of Oil and Gas Company Buys More Shares Amid Stock Price Weakness

One member of Occidental Petroleum Corporation (NYSE:OXY)’s boardroom bought some shares earlier this week, after the company’s shares have experienced two major slumps since early September. William R. Klesse, Board member since 2013, purchased 10,000 shares on Monday at a price tag of $64.89 each, boosting his overall holding to 47,940 shares.

The oil and gas company recently announced the acquisition of 35,000 acres of West Texas acreage for a cash consideration of $2 billion, increasing its position in the oil-rich Permian Basin. As part of the deal, Occidental Petroleum Corporation (NYSE:OXY) also purchased interests in several Permian Basin enhanced oil recovery (EOR) and CO2 properties, and related infrastructure. Nonetheless, the Houston-based company reported a larger-than-expected loss for the third quarter shortly the acquisition announcement, putting downward pressure on the stock. Occidental Petroleum recorded a net loss of $241 million, as compared to the loss of $2.61 billion posted a year ago. The company’s third-quarter production declined by 12% year-over-year to 605,000 barrels of oil equivalent per day. Despite the weak stock performance over the past two months or so, Occidental Petroleum’s shares are up 1% this year. John A. Levin’s Levin Capital Strategies reported owning 2.79 million shares of Occidental Petroleum Corporation (NYSE:OXY) through the latest round of 13Fs.

CEO of Possible Acquisition Target in U.S. Food Industry Buys Shares

The man at the helm of Pinnacle Foods Inc. (NYSE:PF) also bought some shares last week. Mark A. Clouse, the Chief Executive Officer of Pinnacle Foods since late May of 2016, acquired 10,000 shares on Friday at prices that fell between $47.40 and $47.82 per share. Mr. Clouse currently holds an aggregate of 105,057 shares following the recent purchase.

The manufacturer, marketer and distributor of branded convenience food products has seen the value of its shares drop by nearly 6% in the past five trading sessions, which possibly encouraged the CEO to pile up some shares. Nonetheless, the shares of Pinnacle Foods Inc. (NYSE:PF) have gained 14% year-to-date, partially due to expectations that U.S. food company Conagra Brands Inc. (NYSE:CAG), which has been undergoing a massive transformation in the past several years, could be interested in acquiring braded food company Pinnacle Foods. “We believe ConAgra and Pinnacle synergies would be among the highest in U.S. food,” said RBC analysts recently. Iridian Asset Management, founded by David Cohen and Harold Levy, acquired a new stake of 5.25 million shares of Pinnacle Foods Inc. (NYSE:PF) during the September quarter.

The final page of the article will focus on discussing fresh insider selling witnessed at two other companies.

Insider Selling at Health Insurance Giant Following Share Price Surge

Three different insiders at Aetna Inc. (NYSE:AET) offloaded shares throughout the course of the past week. To begin with, President Karen S. Lynch discarded 45,000 shares on Friday at prices varying from $119.42 to $119.75 per share, cutting her ownership stake to 51,254 shares. Board member Molly J. Coye sold 862 shares in one lot last Wednesday at a price tag of $116.96 per share, cutting her holding to 8,662 shares. Last but not least, Francis S. Soistman Jr., Executive Vice President of Government Services Segment at Aetna since mid-June 2013, liquidated 9,150 shares last Monday at prices ranging from $109.71 to $110.00 per share. After the not-so-distant sale, Mr. Soistman currently holds an aggregate of 12,367 shares.

The health insurance giant agreed to acquire Humana Inc. (NYSE:HUM) for around $37 billion in July 2015. Aetna Inc. (NYSE:AET), one of the nation’s leading diversified health care benefits companies, has seen its market value jump by 13% in the past five trading sessions after Donald Trump’s victory in the U.S. presidential election. Analysts believe president-elect Donald Trump’s victory could lead to higher odds for regulatory approval of the multi-billion-dollar merger. “We believe that the change in administration could have an impact on the antitrust review of the merger. In particular, a Republican-led DOJ and FTC could view the merger more favorably and might be more willing to approve the transaction based on the concessions and geographic divestitures offered by the two companies,” said one Argus analyst recently. Daniel S. Och’s OZ Management added a 1.82 million-share stake in Aetna Inc. (NYSE:AET) to its portfolio during the previous quarter.

Mini-Cluster of Insider Selling at Strong Performing Orthodontic-Device Maker

Several insiders at Align Technology Inc. (NASDAQ:ALGN) also unloaded a great deal of shares last week. Joseph S. Lacob, who has been serving on the company’s Board of Directors for numerous years, liquidated 50,000 shares on Friday and 12,479 shares on Monday at prices varying from $91.00 to $91.85 per share, all of which were held in a trust fund that currently owns an aggregate 438,509 shares. Gregory J. Santora, yet another member of the company’s boardroom, discarded 10,700 shares on Friday at a weighted average price of $91.51 per share. The shares were held in a trust fund that owns 21,700 shares after the recent sale.

The medical device company generated nearly 95% of 2015 net revenues from selling the Invisalign System, a very efficient approach to straightening teeth by utilizing a custom-made series of aligners as the main method for treating malocclusion. Align Technology Inc. (NASDAQ:ALGN) has seen its market capitalization skyrocket by 42% since the beginning of the year. Just recently, the orthodontic-device maker reported third-quarter revenues of $278.6 million, which increased by 34.2% year-over-year. The company’s solid revenue growth reflected record Invisalign case volume, which was up 20.5% year-on-year to due growth across all customer channels and geographies, as well as strong continued demand for its iTero scanners. Jim Simons’ Renaissance Technologies LLC was the owner of 944,200 shares at the end of September.

Disclosure: None