Morgan Stanley (MS), Citigroup Inc. (C) and Three Other Companies Register Noteworthy Insider Selling

Last week’s dollar volume of insider buying slightly increased relative to the volume recorded for the previous five-day period, but still remained at a low level. Meanwhile, exactly one-fourth of the companies included in the S&P 500 Index releasing their second-quarter earnings reports, with 68% of them having reported earnings above expectations and 57% of them having reported sales above consensus estimates. Hence, the lower the number of companies releasing top and bottom line figures below estimates, the weaker the volume of insider buying will be in the upcoming weeks. Why? Because corporate insiders usually follow the pattern of “selling high and buying low”.

Going back to the ongoing second-quarter earnings season, the blended earnings decline for the second quarter currently stands at 3.7%, meaningfully lower than the 5.5% decline projected ahead of the earnings season. The blended earnings combine the actual results for the companies that have already reported their results and estimated results for those companies yet to report. The insider selling-to-buying ratio for the past week stood at 26.0-to-1, which implies corporate insiders sold $26 worth of shares for each $1 worth of shares bought. That said, the following article will discuss the several noteworthy insider sales recorded with the SEC on Friday.

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Trucking Company Registers Massive Insider Sale after Lowering Financial Expectations

J B Hunt Transport Services Inc. (NASDAQ:JBHT) recently registered one of its largest insider sales of 2016,, as James K. Thompson, Chairman of the company’s Board of Directors, offloaded 20,000 shares on Wednesday at a price tag of $81.18 each. Mr. Thompson also transferred 2,175 shares pursuant to a divorce and confidential property settlement reached in 2011. After these transactions, the Chairman continues to own 65,746 shares.

The well-known trucking company has seen its market capitalization gain 13% since the start of 2016 even though the company recently lowered its financial expectations for 2016 due to declining freight rates. In mid-July, J B Hunt Transport Services Inc. (NASDAQ:JBHT) said it anticipates 2016 full-year revenue to increase 7% year-over-year, down from the previous projection of as much as 12%. Full-year operating income is anticipated to increase by a mere 5%, down from previous expectations of an 8%-to-11% expansion. Ken Griffin’s Citadel Advisors LLC owned nearly 475,000 shares of J B Hunt Transport Services Inc. (NASDAQ:JBHT) at the end of March.

Strong Performing Industrial Giant Witnesses Increased Insider Selling

Illinois Tool Works Inc. (NYSE:ITW) saw four different executives discard shares this past week, three of whom sold only freshly-exercised stock options. Michael M. Larsen, Chief Financial Officer and Senior Vice President, sold out his entire stake of 14,000 shares on Thursday at prices ranging from $113.90 to $114.11 per share. Although, Mr. Larsen does not own any shares of common stock at the moment, he does hold dozens of thousands of employee stock options and performance restricted stock units.

The recent insider selling comes shortly after the global manufacturer of a diversified range of industrial products and equipment raised its guidance for full-year earnings per share for the second quarter in a row. Illinois Tool Works Inc. (NYSE:ITW)’s full-year GAAP EPS guidance was raised to the range of $5.50-to-$5.70 per share from the prior guidance of $5.40-to-$5.60 per share. The engineering-equipment manufacturer recorded total revenue of $3.43 billion for the second quarter, down by a mere 0.1%. Foreign exchanges headwinds hit the company’s top line by 1.3%. ITW shares are up 23% thus far in 2016. Jim Simons’ Renaissance Technologies added a 537,000-share position in Illinois Tool Works Inc. (NYSE:ITW) to its portfolio during the first quarter.

The next page of this article will discuss fresh noteworthy insider selling activity registered at three other companies, including two well-known banks.

Morgan Stanley Sees One Executive Sell Big

Morgan Stanley (NYSE:MS) had one member of its executive team jettison a massive block of shares this past week. Jeffrey S. Brodsky, Executive Vice President and Chief Human Resources Officer, discarded 19,955 shares on Thursday at prices varying from $28.66 to $29.08 per share, cutting his overall holding to 113,754 shares.

The insider sale comes after Morgan Stanley released its second-quarter earnings report, which revealed $8.9 billion in revenues and a profit of $1.4 billion or $0.75 per share. The top line decreased 9% year-on-year and the bottom line plunged by 12% year-over-year, but both figures beat analysts’ expectations of $8.3 billion in revenues and $0.60 in EPS. Morgan Stanley (NYSE:MS)’s wealth management business somewhat muted the effects of the volatile markets on revenues during the second quarter. The bank’s wealth management arm posted revenue of $3.81 billion, down $64 million year-over-year. The decrease reflects lower commission revenues and lower levels of new issue activity. Morgan Stanley shares are 9% in the red thus far in 2016. Ken Fisher’s Fisher Asset Management cut its stake in Morgan Stanley (NYSE:MS) by 16% during the June quarter to 310,475 shares.

Fourth-Largest U.S. Bank by Assets Also Sees HR Executive Offload Shares

Citigroup Inc. (NYSE:C) was yet another bank that had an HR-related executive sell shares this past week. Michael Joseph Murray, Citi’s Head of Human Resources, sold 8,122 shares on Wednesday at $44.35 apiece, trimming his ownership to 35,042 shares.

The fourth-largest U.S. bank by assets has seen the value of its stock decline by 14% since the start of 2016. Like its industry peers, Citigroup Inc. (NYSE:C)’s both stock and financial have been under pressure from a mix of low interest rates and weak energy prices. However, some analysts believe Citigroup represents one of the most attractive plays in the financial services space, with its shares currently changing hands at around 8.6-times expected earnings and a 30% discount to tangible book value. It is also believed that the bank’s relatively small network of 729 branches on the North American continent could benefit the bank in the foreseeable future given the fast-increasing transition to digital banking. Stephen J. Errico’s Locust Wood Capital Advisers acquired a new stake of 20,565 shares of Citigroup Inc. (NYSE:C) during the second quarter.

Chip and Intellectual Property Vendor Has CEO Offload Shares

Last but not least, Rambus Inc. (NASDAQ:RMBS) also recorded a noteworthy insider sale last week. President and CEO Ronald D. Black discarded 29,528 shares on Thursday at prices ranging from $13.35 to $13.66 per share. After the recent sale, Dr. Black continues to own 359,241 Rambus shares.

The shares of the maker of cutting-edge semiconductor and IP products, spanning memory and interfaces to security, smart sensors and lighting have gained 18% since the start of the year. Rambus Inc. (NASDAQ:RMBS)’s second-quarter revenue grew by 5% year-over-year to $76.5 million, reflecting higher revenue from security technology development projects, including revenue from the acquisition of Smart Card Software Limited. SCS was a privately-held leader in mobile payments and a leading supplier of smart ticketing systems. During the second quarter, Rambus agreed to purchase the assets of Semtech’s Snowbush IP, a provider of silicon-proven, high-performance serial link solutions. Charles Paquelet’s Skylands Capital added a 39,350-share position in Rambus Inc. (NASDAQ:RMBS) to its pool of holdings during the June quarter.

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