Marten Transport Ltd (MRTN), Amgen Inc. (AMGN) and Parker-Hannifin Corp (PH) Witness Striking Insider Selling

There are various reasons why corporate insiders might sell shares of their own companies. For instance, they may seek to diversify their holdings, buy a new house, or take an expensive vacation, which makes it practically impossible to know the actual reason behind any particular insider sale. Therefore, securities sales conducted by insiders are not as powerful of indicators as insider purchases. However, directors and executives are financially-educated individuals, so they also would not be as likely to sell shares if they anticipated positive catalysts that could drive their companies’ share price up in the near-term. Therefore, heavy insider selling, particularly in the form of clusters of selling, may serve as an indicator that insiders believe their company’s share price is approaching or exceeding a “fair” value. Insider Monkey processed the majority of Form 4 filings submitted with the SEC this week and identified 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).

This Truckload Carrier’s CEO Unloaded Multiple Blocks of Shares in the Past Week

Let’s get underway by analyzing the fresh insider selling witnessed at Marten Transport Ltd (NASDAQ:MRTN). The trucking company’s Chairman and Chief Executive Officer, Randolph L. Marten, discarded 8,860 shares last Tuesday, 31,140 shares last Wednesday, and 20,000 shares on Thursday at prices that ranged from $19.00 to $19.43 per share. Mr. Marten currently owns a direct ownership stake of 7.29 million shares.

The U.S. temperature-sensitive truckload carrier, which specializes in transporting food and other consumer packaged goods that necessitate a temperature-controlled environment, has seen its shares advance by 5% since the beginning of the year. However, Marten Transport Ltd (NASDAQ:MRTN)’s stock performance has been weighed on by a recent report released by analysts at Stifel Inc. that targeted the entire truckload industry. Specifically, the analysts suggested that pricing for long-haul trucking services will continue to be weak through the end of the year, saying that “pricing pressure is rampant in the generic freight market”. Marten Transport was one of four operators downgraded by Stifel, with our main subject of discussion being downgraded to ‘Hold’ from ‘Buy’. The shares of most trucking companies, including Marten Transport, have embarked on an uptrend since mid-January, as retailers showed signs of renewed restocking after the holiday shopping season. However, various analysts and research hubs said that capacity in the truckload industry continued to be abundant, which usually gives shipping customers more leverage over truckload companies.

Marten Transport’s shares are priced at 15.6-times expected earnings, compared to the forward P/E ratios of 15.4 for USA Truck Inc. (NASDAQ:USAK), 16.1 for Hub Group Inc. (NASDAQ:HUBG), and 18.0 for Knight Transportation (NYSE:KNX). Cristan Blackman’s Empirical Capital Partners acquired a new stake of nearly 428,000 shares of Marten Transport Ltd (NASDAQ:MRTN) during the final quarter of 2015.

The next two pages of this article will digest the recent insider selling registered at Amgen Inc. (NASDAQ:AMGN) and Parker-Hannifin Corp (NYSE:PH).

Giant Biotechnology Company Has Two Insiders Sell Shares on Friday

Amgen Inc. (NASDAQ:AMGN) witnessed a mini cluster of insider selling last week involving two insiders. To begin with, Sean E. Harper, Executive Vice President of Research and Development, sold 21,875 shares on Friday at prices varying from $156.48 to $159.51 per share, trimming his ownership to 42,248 shares. Director David Baltimore offloaded 3,312 shares on the same day at prices that fell in the range of $157.14 to $157.28 per share, which cut his overall holding to 32,350 shares.

The mini cluster of selling comes after the biotechnology company released a better-than-expected first quarter earnings report, thanks to strong sales of key drugs such as rheumatoid arthritis drug Enbrel, bone fracture drug Prolia, Aranesp, Neulasta, and others. Amgen raised its 2016 revenue guidance to the range of $22.2 billion to $22.6 billion as a result, from the previous range of $22 billion to $22.5 billion. The company’s 2016 earnings per share outlook was also increased to $10.85-to-$11.20 from the prior guidance range of $10.60 to $11.00. Nonetheless, the company’s anti-cholesterol drug Repatha, which was launched in August 2015, generated sales of $16 million in the first quarter, below analysts’ expectations of $27 million.

Amgen shares are down by 3% since the beginning of 2016 despite having gained 4% in the past three months. The stock is priced at 12.9-times expected earnings, exactly at the same level as the forward P/E multiple for the entire biotechnology sector. The hedge fund sentiment towards the biotechnology company declined slightly during the December quarter, with the number of funds invested in the stock dropping to 68 from 73 quarter-over-quarter. Barry Dargan’s Intermede Investment Partners upped its stake in Amgen Inc. (NASDAQ:AMGN) by 41% during the March quarter to nearly 200,000 shares.

Stable Income-Paying Industrial Stock Jettisoned by Executives

Last but not least, two executives at Parker-Hannifin Corp (NYSE:PH) sold shares this past week. John R. Greco, President of the Instrumentation Group and Vice President, discarded 4,300 shares on Thursday at a weighted average price of $116.42, cutting his ownership to 12,476 shares. William G. Eline, Vice President and Chief Information Officer, filed earlier this week to disclose the sale of a 4,300-share block at a weighted average sale price of $116.51, which trimmed his stake to 15,794 shares.

Parker-Hannifin operates as a diversified manufacturer of motion and control technologies and systems, offering precision engineered solutions for various mobile, industrial, and aerospace markets. The company is highly exposed to international markets, so the recent weakening of the U.S dollar against major global currencies is anticipated to have a positive impact on the industrial company’s financial performance (assuming the weakness of the green buck is not short-lived). Parker-Hannifin recorded net sales of $8.40 billion for the nine months that ended March 31, down from a much higher figure of $9.57 billion reported for the same period of the prior fiscal year.

It is important to note that Parker-Hannifin boasts a dividend yield of 2.22%, while the company’s payout ratio for the nine months that ended March 31 was only 45%. The company has paid 264 consecutive quarterly dividends and has increased its annual dividend payment for 60 consecutive years, ranking it as one of the top-five companies with the longest current runs of annual dividend increases among S&P 500 companies. Columbus Circle Investors, managed by Clifford G. Fox, purchased a new stake of 75,588 shares of Parker-Hannifin Corp (NYSE:PH) during the January-to-March quarter.

Disclosure: None