Massive Cluster of Insider Selling at Data Management Company and Other Insider Trading

Although much research concludes that securities purchases on the part of insiders tend to beat broader market benchmarks by a significant margin, Insider Monkey does not recommend investors to blindly mimic each insider trade. Instead, insider trading metrics can serve as additional tools in one’s security analysis process – indicators that can be used to support larger investment theses.

More specifically, retail investors should focus on pairing insider trading activity with a general investment thesis rather than on blindly mimicking each insider purchase or sale. The larger investment thesis could be based on expected cash flow improvement, pressure from activist hedge funds or the possibility of a takeover, to name just a few. At the same time, investors could use insider buying and selling activity, particularly clusters of buying or selling, as a stock selection procedure. Normally there is a story behind each cluster of insider buying or selling, so strong insider trading activity could point to possible “buy” or “sell” candidates. With that in mind, the following article will discuss a set of noteworthy insider transactions reported with the SEC on Thursday.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively the most bullish on. Over the past year, this strategy generated returns of 39.7%, topping the 24.1% gain registered by S&P 500 ETFs. Insider Monkey’s enhanced small-cap strategy registered gains of more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points in the last 4.5 years (see the details here).

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Cluster of Insider Buying at Independent Oil and Natural Gas Company

To begin with, there was a cluster of insider buying at Parsley Energy Inc. (NYSE:PE) at the beginning of the week. President and Chief Operating Officer Matthew Gallagher bought 32,985 Class A shares on Tuesday at prices varying from $30.06 to $30.45 per share, lifting his overall holding to 661,778 shares. Board member Jerry Windlinger snapped up 3,000 Class A shares on the same day at a price tag of $30.35 each, a purchase that increased Mr. Windlinger’s stake to 5,667 shares. Director A. R. Alameddine purchased 3,500 Class A shares on Wednesday at $30.94 apiece. Mr. Alameddine currently owns an aggregate of 92,988 shares.

The independent oil and natural gas company focused on unconventional oil and natural gas reserves in the Permian Basin has seen the value of its shares decline by 11% since the beginning of the year. Parsley Energy Inc. (NYSE:PE) recently agreed to buying certain assets in the oil-rich Permian Basin from privately-held Double Eagle Energy Permian LLC for around $2.8 billion. The deal encompasses undeveloped acreage and producing oil and gas properties, adding 71,000 net acres to Parsley Energy’s acreage in the Midland Basin. The deal is set to expand the company’s total acreage in the Permian Basin to 227,000 acres. While some say that the purchase looks expensive at $37,300 per undeveloped acre, others says that the deal looks cheap when comparing with an average of $45,000 per acre for other large Midland Basin transactions agreed last year. Israel Englander’s Millennium Management added a 5.59 million-share position in Parsley Energy Inc. (NYSE:PE) to its pool of holdings during the December quarter.

Let’s move on to the next page of this insider trading article, where we discuss insider buying at two other companies.

Chairman of Houston-Based Energy Company Buys Shares Amid Share Price Weakness

One member of Carrizo Oil & Gas Inc. (NASDAQ:CRZO)’s boardroom filed Thursday with the SEC to disclose the purchase of a relatively sizeable block of shares. Steven A. Webster, Chairman of the Board of Directors and one of the company’s co-founders, purchased 25,000 shares on Thursday at prices between $31.20 and $31.28 per share. Mr. Webster currently owns a total of 2.58 million shares following the purchase.

The shares of the Houston-based energy company are 17% in the red thus far in 2017, which possibly explains the Chairman’s decision to pile up some shares. Carrizo Oil & Gas Inc. (NASDAQ:CRZO) is engaged in the exploration, development, and production of oil and gas mainly from resource plays in the United States. The company’s 2016 crude oil production stood at 25,745 stock tank barrels per day, up 12% as compared to 2015 levels. The increase was mainly attributable to strong performance from its wells in the Eagle Ford. Carrizo Oil & Gas managed to achieve this increase despite a 18% decrease in drilling and completion capital expenditures in 2016 versus 2015. There were 21 hedge fund vehicles from our system invested in the energy company at the end of December, which stockpiled nearly 7% of the company’s outstanding shares. Mariko Gordon’s Daruma Asset Management owned 1.19 million shares of Carrizo Oil & Gas Inc. (NASDAQ:CRZO) heading into 2017.

CEO of Leading Manufacturer of Modular Carpet Boosts Equity Stake

A well-informed and important member of Interface Inc. (NASDAQ:TILE)’s management team bought some shares at the beginning of the week. President and Chief Operating Officer Jay D. Gould, who was recently appointed Chief Executive Officer effective this Friday, snatched up 26,300 shares on Tuesday at prices that fell between $18.90 and $19.10 per share. Mr. Gould currently holds an ownership stake of 157,322 shares after the Tuesday purchase.

The world’s largest manufacturer and marketer of modular carpet has seen its market capitalization jump by 16% in the past 12 months. Interface Inc. (NASDAQ:TILE) generated net sales of $958.6 million during 2016, down from $1.0 billion in 2015. The company has been channeling more marketing and sales efforts on non-corporate office segments in recent years in an attempt to reduce exposure to economic cycles that impact the corporate office market segment. The mix of corporate office versus non-corporate office modular carpet sales in the Americas shifted to 44%-56% in 2016, as compared with 64%-36% in 2001. Royce & Associates, founded by Chuck Royce, was the equity holder of 1.18 million shares of Interface Inc. (NASDAQ:TILE) at the end of December.

The final page of the article will discuss fresh insider selling observed at two other companies.

Massive Cluster of Insider Selling at U.S. Data Management Company – Is Goldman’s Sell Rating Justified?

Seven different corporate insiders at Equifax Inc. (NYSE:EFX) offloaded shares at the beginning of the week, so let’s have a quick look at some of the biggest sales. To start with, Chairman and CEO Richard F. “Rick” Smith discarded 74,346 shares on Tuesday at prices ranging from $130.74 to $131.40 per share, trimming his ownership stake to 184,735 shares. John J. Kelley III, Chief Legal Officer and Corporate Vice President, unloaded 8,500 shares on the same day at a weighted average price of $130.85 per share. Mr. Kelley owns 11,787 shares after the sale. A total of 8,849 shares were sold by President of U.S. Information Solutions Paulino R. Barros, who currently owns 6,737 shares.

The global provider of information solutions, employment and income verifications and human resources business process outsourcing services has seen the value of its shares climb by 23% in the past year. Analysts at Goldman Sachs believe Equifax Inc. (NYSE:EFX)’s stock, which currently trades above the $130-price-level, is worth only $100. In late January, Goldman analysts downgraded the U.S. data management company to ‘Sell’ from ‘Neutral’, arguing that “innovation won’t overcome demand growth slowdown.” Goldman economists expect U.S. consumer expenditure growth to decelerate through 2017, their autos team anticipates U.S. auto sales growth to pause, and mortgage originations are set to decline due to the rising interest rate environment. As a result, Goldman Sachs believes Equifax will experience a slowdown in credit reports being checked. Cliff Asness’ AQR Capital Management trimmed its position in Equifax Inc. (NYSE:EFX) by 19% to around 772,000 shares during the December quarter.

CEO of Infrastructure Products Manufacturer Sells Shares After Releasing Surprising Results

The man in charge of Valmont Industries Inc. (NYSE:VMI) also offloaded a large amount of shares earlier this week. Mogens C. Bay, Chairman and Chief Executive Officer since January 1997, sold 14,211 shares on Tuesday for $158.1 each and 35,789 shares on the following day at $160.04 apiece, cutting his ownership to 250,000 shares.

The insider selling mentioned above comes after the shares of the infrastructure products manufacturer surged due to a stronger-than-anticipated earnings report. Valmont Industries Inc. (NYSE:VMI) reported revenue of $675 million for the fourth quarter, marking in increase of 6.4% year-over-year. More importantly, this was the first quarter out of the least 13 quarters that experienced revenue growth. Meanwhile, the company’s management anticipates sales growth in the mid-single digits excluding acquisitions for 2017 although the North American irrigation market is anticipated to be at a cyclical low point. The number of asset managers tracked by Insider Monkey with long positions in Valmont Industries decreased to 20 from 21 during the fourth quarter. The shares of Valmont have gained 33% in the past 12 months. Thomas Bancroft’s Makaira Partners owns roughly 662,000 shares of Valmont Industries Inc. (NYSE:VMI) as of the end of December.

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