Major Insider Selling Detected At Three Companies, Including eBay Inc. (EBAY)

As a general rule, analysts perceive a sharp increase in insider sales as a bearish sign. However, one should bear in mind that insiders may sell stock for numerous reasons unrelated to their companies’ future prospects or current developments. Even so, insider trading behavior, both on the buy and sell side, is one of the wide array of factors investors should closely analyze when making investment decisions. With this in mind, the following article will discuss the noteworthy insider sales at three companies and the potential reasons that might explain those insiders’ activity.

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eBay Inc. (NASDAQ:EBAY) is one of the companies that had a high volume of insider selling activity last week. Raymond J. Pittman, Chief Product Officer and Senior Vice President, reported selling 21,000 shares on Friday at a weighted average sale price of $27.98. The CPO currently owns a stake of 17,605 shares, 8,727 of which represent shares of common stock that remain unvested. Senior Vice President and Chief Technology Officer Stephen Fisher sold 78,775 shares last Monday at prices ranging from $27.89-to-$27.91 per share, after 38,714 non-qualified stock options were exercised on the same day. Consequently, the CTO holds an ownership stake of 15,051 shares following these transactions. Earlier this week, eBay Inc. (NASDAQ:EBAY) announced the completion of the previously-announced sale of its slow-growing eBay Enterprise unit for $925 million to a group of private investors. Meanwhile, the shares of the e-commerce company are 22% in the green year-to-date, and are still trading relatively cheaply if considering the stock’s trailing P/E ratio of 14.67 (compared to the 22.65 average for the S&P 500). Carl Icahn of Icahn Capital LP was among the largest equity holders of eBay Inc. (NASDAQ:EBAY) at the end of the June quarter, with a 46.27 million-share position.

Let’s head to the next page, where we discuss the insider selling activity at Inteliquent and Trinity Industries.

A provider of voice telecommunications services, Inteliquent Inc. (NASDAQ:IQNT) has seen three different insiders sell stock so far this week. Director Timothy A. Samples sold exactly 5,000 shares on Monday at a weighted average price of $20.14, trimming his stake to 18,246 shares. John R. Harrington, Senior Vice President of Litigation, Regulatory and Human Resources at Inteliquent, unloaded 2,399 shares on the same day, at prices between $20.03-and-$20.54 apiece, and currently owns 25,992 shares. He also disposed of 310 shares last Friday to cover tax obligations resulting from the vesting of restricted stock. Edward M. Greenberg, another Member on the company’s Board of Directors, offloaded 9,700 shares on Monday at a weighted average sale price of $20.45, remaining with 6,956 shares. Inteliquent Inc. (NASDAQ:IQNT)’s shares are currently trading at exactly the same level they were trading at during the first trading days of the year, while their trailing P/E ratio of 16.91 might suggest that they are still undervalued. However, the seemingly disappointing third quarter earnings report of the company somewhat weakened the charm of this stock. Jim Simons’ Renaissance Technologies reported owning roughly 938,500 shares in Inteliquent Inc. (NASDAQ:IQNT) through its 13F filing for the June quarter.

Lastly, we will investigate the insider selling activity at Trinity Industries Inc. (NYSE:TRN), one of the largest manufacturers of transportation, construction and industrial products in the United States. Senior Vice President D. Stephen Menzies sold 101,296 shares on Monday at a price of $27.46 per share, and currently owns a 123,909-share stake. The shares of the company are nearly 1% in the red year-to-date, but they are trading at a cheap trailing P/E ratio of 6.00. Of course, Trinity Industries Inc. (NYSE:TRN)’s business environment has been affected by macroeconomic uncertainty, but that does not entirely justify the low valuation. Even more to that, the company recently released a strong third quarter earnings report, posting earnings per share of $1.31, up from $0.91 reported in the same quarter a year ago. Trinity’s revenues reached $1.07 billion, which marked an increase of 8% year-over-year. Charles Paquelet’s Skylands Capital reduced its stake in Trinity Industries Inc. (NYSE:TRN) by 62,750 shares during the third quarter, ending the three-month period with 22,500 shares.

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