Light Insider Selling At Hormel Foods Corp (HRL), General Communication Inc. (GNCMA) And Verint Systems Inc. (VRNT)

All major U.S. indexes are most likely headed south through the end of the current week, due to the plunge in Chinese equities, the depreciation of the yuan and a fresh multi-year low for crude oil prices. The trading in the Chinese stock market closed within 30 minutes from the start of trading on Thursday, as the freshly-installed circuit breakers were triggered for the second time this week. One can also anticipate a potential intensification of a “currency war”, as the Beijing authorities are believed to seek assisting exporters in gaining competitive advantage so as to inject new dynamism into the struggling economy. An intensified “currency war” among major global economies will most likely put even more downward pressure on U.S. corporate earnings. Considering all the mounting worries at the moment, it is not surprising that certain companies’ insiders have started to cash out their holdings. The Insider Monkey team pinpointed three companies with recent insider selling, so this article will discuss recent developments at those companies that might have triggered the sales.

Prior to discussing the insider trading activity, let’s make you familiar with what Insider Monkey does. At Insider Monkey, we 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 the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 102% and beating the market by more than 53 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.

Hormel Foods Corp (NYSE:HRL) is among the companies that witnessed insider selling activity this week. Donald H. Kremin, Group Vice President of Specialty Foods Group, sold 3,000 shares on Tuesday at a weighted average price of $79.21, cutting his overall holding to 19,364 shares. The shares of this processor of meat and food products are up nearly 55% over the past year, so it is no wonder why the company’s insiders are cashing out. Even more to that, the stock trades at a rather expensive trailing price-to-earnings ratio of 31.53, which compares with the average of 22.95 for the companies included in the S&P 500 Index. Hormel Foods Corp (NYSE:HRL) reported net sales of $6.86 billion for the first nine months of fiscal 2015, up by 1.3% year-on-year. Nonetheless, the company’s insider selling might not necessarily serve as reason for concern, considering that Hormel Foods anticipated strong performance in its Specialty Foods segment in the fourth quarter (driven by the improved cost structure of the Muscle Milk protein nutrition products). Similarly, its Refrigerated Foods segment was anticipated to take advantage of sustained value-added sales increases and lower input costs, while the Grocery Products segment was expected to benefit from advantageous raw materials costs and volume growth. Cliff Asness’ AQR Capital Management upped its stake in Hormel Foods Corp (NYSE:HRL) by 18% during the September quarter to 1.51 million shares.

Let’s head to the second page of this article, where the insider selling witnessed at General Communication Inc. (NASDAQ:GNCMA) and Verint Systems Inc. (NASDAQ:VRNT) is closely examined.

General Communication Inc. (NASDAQ:GNCMA) also had one of its insiders unload shares this week. Director Stephen R. Mooney discarded 5,000 Class A shares this Wednesday at $19.95 apiece and currently owns 66,400 shares. This telecommunications corporation provides wireless, data, video, and voice services to residential customers, businesses, government entities and educational institutions in Alaska. General Communication Inc. (NASDAQ:GNCMA)’s business is highly dependent upon economic conditions in Alaska, which are in turn dependent upon the oil industry, state and federal government spending, and tourism. The depressed energy prices have put downward pressure on the Alaska’s state government budget, but the state is believed to have substantial reserves to fund the state government over the next few years. Nonetheless, a sustained and long-term low oil price environment could still impact the demand for General Communication’s products and services. Despite these headwinds, the shares of the telecommunications corporation have advanced 41% since early 2015, which could created an attractive exit point for investors and insiders. The company reported total revenues of $737.2 million for the nine months ended September 30, up from $681.4 million reported a year ago. The number of hedgies from our database with positions in the company climbed to 13 from 10 during the third quarter. John C. Walker’s Stonerise Capital Management was among the hedge funds that initiated new stakes in General Communication Inc. (NASDAQ:GNCMA) during the quarter, holding 500,000 shares as of September 30.

Verint Systems Inc. (NASDAQ:VRNT) also registered light insider selling this week. Director Larry F. Myers reported selling 2,432 shares on Tuesday at prices that ranged from $40.65 to $40.68 per share, trimming his stake to 7,346 shares. The security and enterprise intelligence company has seen its stock decline by 29% over the past year, but most analysts have great expectations about the company’s future performance. The stock has been rated ‘Outperform’ by most financial hubs and analysts in the past several months, with price targets ranging from $50 to $60. The company reported revenue of $849.47 million for the nine months that ended October 31, as compared with $816.78 million reported for the same period a year ago. However, its net income for the nine-month period totaled a mere $0.1 million, down from $26.3 million reported last year. The company is anticipated to be challenged by weakening macroeconomic conditions across its end markets, in particular in the government-security business. A total of 36 hedge funds tracked by Insider Monkey were invested in the company at the end of the third quarter, amassing 12.40% of its outstanding common stock. Ken Fisher’s Fisher Asset Management holds a 1.36 million-share position in Verint Systems Inc. (NASDAQ:VRNT) as of September 30.

Disclosure: None