Massive Insider Selling at Apple Inc. (AAPL) & LHC Group Inc. (LHCG), Plus 3 Companies with Notable Insider Buying

Corporate insiders are constantly buying and selling shares of their own companies and outside investors are wise to keep track of such trades, as directors and executives tend to have a good feel for how their companies are performing. To that end, insider buying is usually interpreted as a very positive sign by stock market watchers, which is backed up by past research, which suggests that insider purchases tend to beat broader market benchmarks by a wide margin. On the contrary, insiders can sell shares for a wide range of reasons such as tax requirements and diversification plans, so insider selling is much more difficult to interpret. The proliferation of equity-based compensation and pre-arranged trading plans has distorted insider trading data in recent years, as most insider selling is either related to freshly-exercised stock options or conducted under trading arrangements. Insider Monkey keeps track of spur-of-the-moment insider trading only, as we believe that transactions conducted under trading plans put in place several months earlier are not overly relevant to current market conditions. With that said, this article will examine several noteworthy insider transactions recorded with the SEC on Wednesday.

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 U.S. Fertilizer Maker Had Two Executives Buy Shares after Terminating a Huge Inversion Deal

CF Industries Holdings Inc. (NYSE:CF) has seen two different insiders purchase shares this week. To start with, Christopher D. Bohn, Senior Vice President of Manufacturing, purchased 12,500 shares on Tuesday at prices between $27.88 and $27.95 per share, lifting his overall holding to 31,718 shares. Moreover, Board member Robert C. Arzbaecher snapped up 17,275 shares on the same day at prices ranging from $27.94 to $28.10 per share, of which 275 shares were bought for his daughters. Mr. Arzbaecher holds a direct ownership stake of 66,843 shares following the recent purchase.

Earlier this week, the U.S manufacturer of nitrogen fertilizer and its Dutch rival OCI N.V. terminated their multi-billion-dollar merger after the U.S Treasury changed U.S. tax rules last month to hinder inversion deals. Under the agreement inked in early August, the U.S fertilizer maker was set to combine with the European, North American and global distribution businesses of OCI N.V. and become a subsidiary of a new holding company domiciled in the Netherlands. The deal could have reduced CF Industries Holdings Inc. (NYSE:CF)’s corporate tax rate from 35% to 20%. Shares of CF Industries are 27% in the red year-to-date. John Burbank’s Passport Capital owns 11.16 million shares of CF Industries Holdings Inc. (NYSE:CF) as of March 31.

Head to the next two pages of this insider trading article to see the details on several noteworthy insider transactions registered at four other companies, including the iPhone maker.

Founder of Empire Resources Resumes Efforts to Acquire All of Company’s Shares

Empire Resources Inc. (NASDAQ:ERS)’s Chief Executive Officer and President Nathan Kahn, filed Wednesday to report the purchase of 120,000 shares at a price of $3.65 per share. After the recent purchase, Mr. Kahn currently holds an ownership stake of 3.82 million shares, which is owned jointly with Sandra Kahn, the company’s Vice President, Chief Financial Officer, Treasurer and Secretary. Meanwhile, Board member Harvey Wrubel reported the sale of 120,000 shares, so the Kahns most probably acquired Mr. Wrubel’s block of shares. It is important to note that the pair explored the possibility of acquiring all shares of Empire Resources last year, but terminated those efforts earlier this year.

The distributor of semi-finished aluminum and steel products recorded net sales of $122,125 for the first three months of 2016, down from $168,253 recorded a year earlier. The decline was mainly driven by unstable economies and currencies in Latin America, which forced Empire Resources Inc. (NASDAQ:ERS) to avoid entering into new contracts with local customers on the continent. Shares of Empire Resources have gained 4% thus far in 2016. Jim Simons’ Renaissance Technologies has 32,400 shares of Empire Resources Inc. (NASDAQ:ERS) amid its pool of holdings as of the end of the first quarter.

Longtime Director of This Powersports Company Bought New Stake Earlier This Week

Polaris Industries Inc. (NYSE:PII)’s Director Kevin Farr acquired a new stake of 2,100 shares on Monday at a price of $83.15 per share. While the size of the purchase is not overly significant, the acquisition is particularly interesting because Mr. Farr has been serving on the company’s Board since October 2013 and had not engaged in any transactions until now. So is this the right time to jump into the market and buy some shares of Polaris Industries?

The Minnesota-based powersports company has seen its market value decline by 41% in the past 12 months, so Mr. Farr may be acting as a bottom-fishing investor at the moment. Polaris Industries Inc. (NYSE:PII)’s total sales for the first quarter of 2016 decreased to $983.0 million from $1.03 billion recorded a year earlier. The decrease was mainly driven by lower sales of off-road vehicles due to ongoing softness in North American retail sales in regions heavily dependent on crude oil prices. Gabriel Plotkin’s Melvin Capital Management added a 425,000-share stake in Polaris Industries Inc. (NYSE:PII) to its portfolio during the first quarter of 2016.

iPhone Maker Sees Influential Executive Unload a Massive Block of Shares

It has been a long time since Insider Monkey last saw spur-of-the-moment insider selling at Apple Inc. (NASDAQ:AAPL), where most insider sales are usually conducted using freshly-exercised stock options or under pre-arranged trading plans. D. Bruce Sewell, Senior Vice President of Legal and Global Security, General Counsel and Secretary, discarded a massive block of 103,300 shares on Monday at prices that ranged from $96.55 to $96.95 per share. After the recent sale, Mr. Sewell continues to hold 239,432 shares of Apple.

The Financial Times recently reported that one of the iPhone maker’s executives raised the prospect of the Cupertino-based company buying Time Warner Inc. (NYSE:TWX) at a meeting with the owner of CNN. Apple Inc. (NASDAQ:AAPL) seeks to enter the media industry and several trustworthy news outlets are mulling over whether Apple may be interested in buying video streaming provider Netflix Inc. (NASDAQ:NFLX). While Apple is not known as a pronounced M&A player, as its biggest acquisition was the $3.1 billion purchase of Beats Electronics in 2014, the company does have enough cash on its balance sheet to buy almost anything it desires. Apple shares are 4% in the red year-to-date. Warren Buffett’s Berkshire Hathaway acquired a new stake of 9.81 million shares of Apple Inc. (NASDAQ:AAPL) during the March quarter.

This Provider of Post-Acute Health Care Services Has Co-Founder Offload Shares

LHC Group Inc. (NASDAQ:LHCG) has seen its Co-Founder, Chairman and Chief Executive Officer unload shares this week. Keith G. Myers sold 21,000 shares on Monday, 75,000 shares on Tuesday and 30,000 shares on Wednesday at prices that fell between $41.00 and $42.94 per share, trimming his direct ownership stake to 195,881 shares. Mr. Myers also holds an indirect ownership stake of 1.12 million shares held via K&G Family LLC, of which he is a manager.

The shares of the provider of post-acute health care services have lost 9% of their value since the beginning of the year. LHC Group Inc. (NASDAQ:LHCG) had 367 service providers in 25 states at the end of the March quarter. The company’s net service revenue for the quarter increased to $222.55 million from $193.08 million reported a year prior. The number of hedge funds in our system with stakes in the company climbed to 18 from 15 during the first quarter. Israel Englander’s Millennium Management owns 217,425 shares of LHC Group Inc. (NASDAQ:LHCG) as of the end of March.

Disclosure: None