Massive Cluster of Insider Selling at Semiconductor-Equipment Maker After Call-Off of Buyout Deal, Plus Insider Trading at AT&T, Delta, More

One could formulate two major claims based on the massive pile of research on insider trading conducted over the years. First, corporate insiders such as Board members and executives earn abnormal returns when buying or selling shares of their companies. Second, outsiders can also earn abnormal returns by mimicking the insider transactions reported with the Securities and Exchange Commission.

The existence of the so-called insider trading anomaly is inconsistent with the strong form of the efficient market model, which claims that all information, both public and private, is fully reflected in a company’s stock price. Nonetheless, hardly anyone considers profitable insider trading as a surprising phenomenon, mainly because of the widespread belief that corporate insiders have monopolistic access to information. Numerous insiders have been trading profitably over the decades within the restrictions placed on them by regulators. And considering that the market efficient hypotheses apparently do not apply in real life, why not try to capitalize on this abnormality? For that reason, the following article will lay out a list of notable insider transactions reported with the SEC this Thursday.

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Board Member at AT&T Buys New Stake After Mega-Deal Announcement

One new member of AT&T Inc. (NYSE:T)’s Board initiated a stake in the company earlier this week. Geoffrey Yang, who joined the company’s Board of Directors in late June of 2016, snapped up a new stake of 27,129 shares on Tuesday at prices that ranged from $36.89 to $36.92 per share.

Just recently, AT&T Inc. (NYSE:T) agreed to acquire Time Warner Inc. (NYSE:TWX) in a stock-and-cash transaction that values the target’s stock at $107.50 per share. As communicated in a joint statement, the proposed $85.4 billion mega-deal “combines Time Warner’s vast library of content and ability to create new premium content that connects with audiences around the world, with AT&T’s extensive customer relationships, world’s largest pay TV subscriber base and leading scale in TV, mobile and broadband distribution.” Nonetheless, investors seem to be somewhat skeptical that regulators will approve the transaction, as reflected by Time Warner’s current share price of below $85 a share. AT&T’s shares are 6% in the green thus far in 2016. Ken Fisher’s Fisher Asset Management upped its position in AT&T Inc. (NYSE:T) by 11% during the third quarter to around 55,000 shares.

On the next two pages of this article well dive into more insider trading activity reported with the SEC on Thursday.

Board Member of Strong Performing REIT Buys Shares

A member of Agree Realty Corporation (NYSE:ADC)’s Board of Directors also purchased some shares this week. John Rakolta Jr., Director of the company since August 2011, bought 12,000 shares on Wednesday at a price tag of $47.50 each. Following the recent purchase, Mr. Rakolta currently holds an aggregate of 158,484 shares.

It appears that the Board member purchased the shares via a recently-held public offering of nearly 1.82 million shares, an offering that raised around $86.2 million. The fully-integrated REIT, which is focused on owning, acquiring and developing retail properties net leased to industry leading tenants, plans to use the proceeds from the offering to reduce the amounts outstanding under its revolving credit facility, as well as to fund property acquisitions and development activity, fund working capital needs, and cover general corporate expenses. At the end of September, Agree Realty Corporation (NYSE:ADC)’s portfolio comprised 341 properties in 43 states, totaling around 6.7 million square feet of gross leasable area. The REIT’s shares have gained 39% since the beginning of the year. Driehaus Capital, founded by Richard Driehaus, acquired a 14,983-share stake in Agree Realty Corporation (NYSE:ADC) during the September quarter.

CEO of Medical Equipment Maker Keeps Buying Shares

The man in charge of Natus Medical Inc. (NASDAQ:BABY) just keeps buying more and more shares. After buying 10,000 shares in September, President and Chief Executive Officer James B. Hawkins snatched up an additional 10,000 shares on Thursday at prices varying from $38.00 to $38.60 per share. After the recent purchase, Mr. Hawkins currently holds an ownership stake of 469,725 shares.

After lowering its third quarter revenue guidance in late-September due to a decision to stop shipping some products from its Seattle facility amid a process of eliminating deficiencies in engineering and manufacturing quality processes, the provider of newborn care and neurology healthcare products and services recently provided encouraging guidance for the fourth quarter. Natus Medical Inc. (NASDAQ:BABY) said that it anticipates fourth quarter revenue in the range of $107 million-to-$109 million, which would represent a year-over-year increase of 8% at the midpoint of the guidance range. In late-September, the medical equipment maker agreed to acquire the GN Otometrics business – which manufactures hearing diagnostics and balance assessment equipment, disposables and software – from GN Stone Nord for a cash consideration of $145 million. The CEO of Natus Medical believes that “Otometrics can grow organically by 5% or more in the years ahead.” The shares of Natus Medical are down by 17% year-to-date. Fisher Asset Management reported ownership of approximately 612,000 shares of Natus Medical Inc. (NASDAQ:BABY) in its 13F filing for the third quarter.

The final page of this article will discuss fresh insider selling at two companies.

CAO and CEO of Second-Largest U.S Airline by Traffic Discard Shares

Two influential and well-informed executives at Delta Air Lines Inc. (NYSE:DAL) discarded shares earlier this week. Edward H. Bastian, the Chief Executive Officer of Delta Air Lines for nearly half-a-year after stepping into the role in early-May, offloaded 50,000 shares on Wednesday at $41.25 apiece, trimming his ownership stake to 232,302 shares. Craig M. Meynard, Chief Accounting Officer and Vice President since November 2012, sold 3,500 shares on Monday at prices that fell between $41.41 and $41.42 per share. After the recent sale, Mr. Maynard currently owns an aggregate of 11,077 shares.

The shares of the second-largest U.S. airline by traffic have taken a serious beating this year, as the stock is down by 17% year-to-date. The airline’s recent earnings report showed that it experienced a disappointing summer season. Delta Air Lines Inc. (NYSE:DAL)’s passenger revenue for the September quarter was $9.07 billion, a decrease of 5.5% year-over-year. Meanwhile, the passenger revenue per available seat mile decreased by a disturbing 6.8%, with one percentage point of the PRASM decrease being related to a technology outage in August. David Keidan’s Buckingham Capital Management upped its position in Delta Air Lines Inc. (NYSE:DAL) by 9% during the third quarter, to 286,296 shares.

Massive Cluster of Insider Selling at KLA-Tencor

Six different executives at KLA-Tencor Corp (NASDAQ:KLAC) unloaded shares this week, a massive cluster of insider selling that should receive some attention from the investment community. Without further ado, let’s have a brief look at some of the insider transactions. To start with, Executive Vice President Michael D. Kirk sold 19,750 shares on Tuesday at prices varying from $74.47 to $74.64 per share, as well as offered 834 shares as a gift on the very same day. Following these transactions, Mr. Kirk currently owns 445 shares of common stock along with an additional 66,092 restricted stock units. Virendra A. Kirloskar, Chief Accounting Officer and Senior Vice President, offloaded 8,006 shares on the same day at a weighted average price of $74.51 per share, a sale that cut the CAO’s ownership stake to 297 shares. Executive Vice President Bobby R. Bell liquidated 7,682 shares on Tuesday at $74.47 apiece, reducing his overall ownership to 12,778 shares. Bren D. Higgins, Chief Financial Officer and Executive Vice President, offloaded 4,812 shares on the same day for $74.94 each. After the sale, Mr. Higgins currently owns 4,610 shares.

The massive cluster of insider selling comes shortly after semiconductor equipment maker Lam Research Corporation (NASDAQ:LRCX) terminated its $10.6 billion deal to buy KLA-Tencor Corp (NASDAQ:KLAC) after the U.S. Department of Justice communicated that it had serious concerns that the deal would harm competition. Lam Research agreed to acquire KLA-Tencor for $67.02 per share last October amid a broader wave of consolidation in the chip industry. The shares of KLA-Tencor are 7% in the green this year. Algert Coldiron Investors, run by Peter Algert and Kevin Coldiron, owns 48,043 shares of KLA-Tencor Corp (NASDAQ:KLAC) as of September 30.

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