Manhattan Associates Inc. (MANH), Linear Technology Corporation (LLTC) and Sherwin-Williams Co (SHW) Had Insiders Sell Shares This Past Week

The investment community is well-aware that corporate insiders can sell shares in their own companies for a wide variety of reasons, so insider trading watchers should mostly focus on insider selling that involves three or more insiders selling shares in the past 30 days or so. Clusters of insider selling appears to be more indicative of a feeling that companies are approaching or exceeding their “fair” market value. Heavy insider selling can help to avoid investing in bad stocks, so investors should always ask themselves why they want to buy stocks or hold onto stocks that executives and directors are selling. Insider Monkey analyzed dozens of Form 4 filings submitted with the U.S. SEC on Monday and pinpointed three companies with noteworthy insider selling.

Academic research has shown that certain insider purchases historically outperformed the market by an average of seven percentage points per year. This effect is more pronounced in small-cap stocks. Another exception is the small-cap stock picks of hedge funds. Our research has shown that imitating the 15 most popular small-cap stocks among hedge funds outperformed the market by nearly a percentage point per month between 1999 and 2012 (read more details here).

The Man in Charge of This Software Maker Sold Shares Last Week

Manhattan Associates Inc. (NASDAQ:MANH) has seen three different executives unload shares in the past 30 days, so let’s take a glimpse at the most recent insider selling. President and Chief Executive Officer Eddie Capel sold 20,000 shares on Friday at prices that ranged from $66.00 to $66.92 per share, cutting his overall holding to 197,438 shares.

The CEO’s sale comes after the software maker surprised investors with a stronger-than-expected first-quarter earnings report, which pushed the share price higher by 25% in the past month. The stock is almost flat year-to-date, but has gained 20% in the past 12 months. Manhattan Associates Inc. (NASDAQ:MANH) develops, sells, services and maintains software solutions designed to manage supply chains, inventory and omni-channel operations for retailers, wholesalers, logistics providers and other organizations. Going back to the aforementioned earnings report, the company reported record non-GAAP adjusted diluted earnings per share of $0.42 for the first quarter on record total revenue of $149.86 million. This compares to EPS of $0.34 on revenue of $133.52 million reported for the same period of the prior year. More importantly, Manhattan Associates increased its full-year 2016 revenue guidance to the range of $615 million to $620 million, which implies an annual growth rate of 10.5%-to-11.5%, versus the  previous guidance of $609 million to $615 million. During the first quarter, the supply-management software maker completed license wins with new customers such as Levi Strauss & Co. and Central Garden & Pet Co (NASDAQ:CENT), as well as expanded relationships with existing customers such as Ascena Retail Group Inc. (NASDAQ:ASNA) and Under Armour Inc. (NYSE:UA).

Shares of Manhattan Associates are currently changing hands at around 33.5-times expected earnings, below the forward PE multiple of 36.8 for the Application Software sector, but significantly above the ratio of 18.8 for the Nasdaq 100 Index. Jim Simons’ Renaissance Technologies had 2.36 million shares of Manhattan Associates Inc. (NASDAQ:MANH) in its equity portfolio at the end of 2015.

Let’s head to the next pages of this article, where we will discuss the insider selling witnessed at Linear Technology Corporation (NASDAQ:LLTC) and Sherwin-Williams Co (NYSE:SHW).

This Analog Chipmaker Saw Two Executives Sell Shares Lately

Linear Technology Corporation (NASDAQ:LLTC) had two executives sell shares in the past several trading sessions. To begin with, Paul V. Chantalat, Vice President of Quality and Reliability, discarded 15,000 shares on Monday at $45.91 apiece, which trimmed his ownership to 63,255 shares. Moreover, David A. Quarles, Vice President of International Sales, offloaded 2,000 units of common stock on Friday for $46.17 each, reducing his holding to 65,013 units.

The analog chipmaker has seen its market value gain 8% since the beginning of 2016, partially owing to the company’s freshly-released financial results for the third quarter of fiscal 2016 that ended April 3. Although the market for analog chips is highly competitive, Linear Technology managed to deliver a strong earnings report. Soon after the release of the earnings report, analysts at Jefferies raised the price target on the manufacturer of linear integrated circuits to $53 from $50 and reiterated their ‘Buy’ rating on the stock, citing strong booking trends, lean channel inventory and stronger end-market demand.

Earlier this year, Linear Technology raised its annual dividend payment for the 24th consecutive year, so the company is on track to join the exclusive list of Dividend Aristocrats in early 2017. Specifically, the Board approved an increase in the quarterly dividend to $0.32 per share from $0.30, with the freshly-upped dividend payment equating to a current dividend yield of 2.79%. The analog chipmaker paid out approximately 62% of net earnings in the form of dividends during the nine months that ended April 3, which makes us believe that the company will join the list of Dividend Aristocrats without difficulties. Meanwhile, the stock is priced at 21.1-times expected earnings, significantly above the forward P/E multiple of 14.3 for the Semiconductors sector. First Eagle Investment Management owned 13.75 million shares of Linear Technology Corporation (NASDAQ:LLTC) at the end of December.

Widely-known Paint Maker Had Board Member Sell Shares

Sherwin-Williams Co (NYSE:SHW) had one Board member sell some shares last week. Director David F. Hodnik sold 243 shares for $297.44 each and 600 shares at $297.54 apiece on Friday, cutting his overall ownership to 11,295 shares. These insider sales come after the paint maker released a stronger-than-expected earnings report last week.

In March, Sherwin-Williams announced that it had agreed to purchase rival Valspar Corp (NYSE:VAL) for roughly $11.3 billion, a deal that would enable the acquirer to receive more access to big-box retailers such as Lowe’s Companies Inc. (NYSE:LOW), as well as expand operations abroad. Under the terms of the newly-sealed agreement, Valspar shareholders will receive $113 per share in cash should the merger receive approval. The multi-billion-dollar merger will result in $280 million annual cost synergies within two years, with the long-term cost synergy target being $320 million. The combined paint behemoth has 2015 pro-forma annual revenue of roughly $15.6 billion, more than the top-line figures of $15.3 billion and $13 billion for industry rivals PPG Industries and Akzo Nobel N.V., respectively. Analysts at Credit Suisse believe that there is a 95% probability that the business combination will close successfully. Credit Suisse also assigned an 80% probability that the deal will go through without undergoing any divestitures and a 15% probability that the deal will go through with some divestitures.

Shares of Sherwin-Williams have advanced by 15% since the beginning of 2016 and trade at a forward PE multiple of 21.3, which is very close to the forward PE ratio of 21.1 for the Specialty Chemicals sector. Charles Paquelet’s Skylands Capital owns 8,210 shares of Sherwin-Williams Co (NYSE:SHW) as of the end of the March quarter.

Disclosure: None