Generally, corporate executives have the most relevant and up-to-date information of the factors that might affect their company in the future. After all, they are the ones running the company. In most cases, corporate executives’ trades bears some information about the future outlook of their company. A researcher in the field of insider trading at the University of Michigan, Nejat Seyhun, provided undeniable evidence that tracking insider activity is profitable. Precisely, the renowned professor and researcher found that when corporate executives acquired shares in their own companies, the stock outpaced the market by 8.9% over one-year period. Equally, when corporate executives unloaded shares, the stock underperformed the market by 5.4%. In addition to that, a number of other studies have found that regular investors could similarly generate sizable returns by imitating insiders. Therefore, in the following article we’ll pinpoint three companies that have witnessed a large volume of insider transactions in terms of monetary value recently. These three companies are: Rent-A-Center Inc. (NASDAQ:RCII), Air Products & Chemicals Inc. (NYSE:APD), and Pfizer Inc. (NYSE:PFE).
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However, insider trading is not the main focus of our research at Insider Monkey. We mainly track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read more details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 123.1% and beating the market by more than 66 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks.
Let’s check these companies out, beginning with Rent-A-Center Inc. (NASDAQ:RCII), which has seen unfamiliar insider buying activity today. Robert D. Davis, the Chief Executive Officer and Director at Rent-A-Center, has made two purchases of 2,500 shares each at average prices of $26.75 and $26.96 per unit. Following these transactions, Robert Davis owns 65,595 shares. Although the shares of Rent-A-Center are down by nearly 26% year-to-date, analysts are bullish on the company as its recently-published second quarter financial results were in line with the analysts’ expectations. Cantor Fitzgerald, one of the premier capital market investment banks, has recently raised the price target for Rent-A-Center to $45 a share from $43. Analysts also claim that the rent-to-own retailer’s transition to a flexible labor model is moving forward as anticipated, while its cost savings plans that are likely to be generated through its sourcing and distribution initiatives will indubitably push the stock higher. Phill Gross and Robert Atchinson’s Adage Capital Management, with its stake of 2.38 million shares, represents the largest investor in Rent-A-Center Inc. (NASDAQ:RCII) within our database.
Moving on to Air Products & Chemicals Inc. (NYSE:APD), the insider trading activity at the company was marked by a noteworthy purchase a couple of days ago. Seifi Gasemi, the Chairman, President and Chief Executive Officer of Air Products & Chemicals, has acquired 20,000 shares at $143.26 each, augmenting his stake to 209,171 shares. The stock of the worldwide supplier of industrial gases and equipment, specialty and intermediate chemicals has grown by slightly over 1% year-to-date, thanks to the recent upsurge in the company’s stock. The stock has gained nearly 13% since the beginning of the previous week and it’s a pity that Seifi Gasemi didn’t boost his stake when it was trading around $129 a share. Air Products & Chemicals has recently reported its financial results for the third quarter of fiscal 2015. The company posted non-GAAG diluted earnings per share (EPS) of $1.65, which yields an increase of 13% on the year. At the same time, Air Products & Chemicals reported a net income of $359 million for the third quarter, up by 14% year-over-year. Within our database, Bill Ackman’s Pershing Square is the largest shareholder of Air Products & Chemicals Inc. (NYSE:APD), holding 20.55 million shares as of the end of March.
Lastly, unlike the previously-discussed companies, Pfizer Inc. (NYSE:PFE) has seen some unusual insider selling activity recently. Loretta V. Cangialosi, the Controller and Senior Vice President of the company, unloaded 24,704 shares through multiple transactions on July 30, remaining with a stake of 174,611 shares. Loretta Cangialosi sold a part of her stake as the stock is currently trading at a new 10-year high, gaining over 15% year-to-date. The multinational pharmaceutical corporation has recently reported the financial results for the second quarter of 2015, posting revenues of $11.85 billion, compared to $12.77 billion reported a year ago. Meanwhile the company posted diluted earnings per share (EPS) of $0.42, down by 7% from the figure reported in the same quarter a year ago. However, Pfizer raised its guidance for the full year, and currently expects adjusted diluted EPS in the range of $2.01 to $2.07, from the previous range of $1.95 to $2.05. The reputable hedge fund Fisher Asset Management, founded and managed by Ken Fisher, is the largest shareholder of Pfizer Inc. (NYSE:PFE) according to our database, owning a stake of 31.81 million shares, as of the end of June.
Disclosure: None
