Newfield Exploration Co. (NFX) and Microchip Technology Inc. (MCHP) Witness Some Noteworthy Insider Selling, Plus Three Other Companies with Insider Buying

Insider Monkey has been monitoring insider trading activity for years and has promoted the idea that retail investors could greatly benefit by examining insider trading behavior. But why should investors keep track of insider trading metrics? Expectedly, directors and executives have a better understanding about their companies’ business operations and future prospects than any analyst and stock market participant, which makes us believe that insiders’ purchases and sales might serve as great tips for outsiders. One of the rules of thumb related to insider trading metrics is that corporate insiders purchase shares on the open market because they believe their own companies’ shares are severely undervalued. More importantly, insiders tend to act as contrarian investors, which means that their market timing involves buying low and selling high. Therefore, major shifts in insider trading behavior may suggest points of turnaround in future stock performance. That said, the following article will list several noteworthy insider trading transactions reported 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).

The Man in Charge of This Data Storage Provider Bought Some Shares This Week

Western Digital Corp (NASDAQ:WDC)’s Chief Executive Officer, Stephen D. Milligan, purchased 22,500 shares on Tuesday at a price of $45.53 per share, all of which are held by a family trust that currently owns 22,567 shares. Mr. Milligan also holds a direct ownership stake of 105,106 shares.

This insider purchase comes shortly after the manufacturer of data storage solutions issued an updated financial guidance for its fiscal fourth quarter that ends July 1, to reflect the impact of the freshly-completed acquisition of flash memory technology maker SanDisk Corporation. Western Digital Corp (NASDAQ:WDC) anticipates earnings per share of $0.90 for the fourth quarter, down from the previous guidance of $1.00 to $1.10 per share. The fourth-quarter top-line guidance was lifted to the range of $3.35 billion to $3.45 billion from the previous forecast of $2.6 billion-to-$2.7 billion. The shares of the California-based data storage provider are down 22% since the beginning of 2016. D. E. Shaw & Co. L.P., founded by David E. Shaw, owns 1.89 million shares of Western Digital Corp (NASDAQ:WDC) as of March 31.

The next two pages of this insider trading article will discuss several insider transactions registered a four other companies.

Newly-Appointed Board Member of This Patent Services Provider Acquired New Stake Last Week

RPX Corp (NASDAQ:RPXC) had not recorded any insider buying activity for quite some time until a newly-appointed Director purchased a massive block of shares this past week. Board member Gilbert Samuel Palter acquired a new stake of 42,000 shares on Thursday for $9.63 each and another block of 58,000 shares on Friday at $9.87 apiece. The 100,000-share block is held by EGADS Enterprises Inc., which is wholly owned by Mr. Palter.

Mr. Palter was appointed to RPX Corp (NASDAQ:RPXC)’s Board of Directors in late May after the company reached a settlement agreement with Mangrove Partners, run by Nathaniel August. In a letter to the Board released in mid-March, the activist shareholder outlined several issues the patent services provider has been facing, including “poor capital allocation”, excessive employee compensation”, “wasteful growth projects”, “stagnant core business growth”, among other things. RPX shares are 8% in the red year-to-date. Mangrove Partners was the owner of 2.58 million shares of RPX Corp (NASDAQ:RPXC) at the end of the March quarter.

One Influential Executive of This Healthy Grocery Retailer Bought Shares Last Week

Sprouts Farmers Market Inc. (NASDAQ:SFM)’s Chief Financial Officer, Bradley Lukow, snapped up 10,000 shares on Thursday at prices varying from $25.15 to $25.16 per share. After the recent purchase Mr. Lukow currently owns 28,525 shares, including 18,525 restricted stock units.

The healthy grocery store has seen its market value decline by nearly 7% since the start of 2016. Sprouts Farmers Market Inc. (NASDAQ:SFM), a leading specialty retailer of fresh, natural and organic food, operates 231 stores in 13 states as of May 5. The company opened 11 new stores during its first quarter that ended April 3, while the fully-year unit store count is set to increase by 36 units. Sprouts Farmers Market anticipates net sales growth in the range of 17%-to-19% for the entire year, with comparable store sales growth expected to be in the range of 4%-to-6%. The company’s first-quarter net sales were $993.2 million, up 16% year-over-year. Dmitry Balyasny’s Balyasny Asset Management has 1.85 million shares of Sprouts Farmers Market Inc. (NASDAQ:SFM) among its holdings as of the end of March.

This Provider of Microcontrollers Had Its CEO Offload Shares Massively Lately

Microchip Technology Inc. (NASDAQ:MCHP)’s leader has been heavily discarding shares in the past several trading sessions. President and Chief Executive Officer Stephen Sanghi sold 45,000 shares on Tuesday for $51.48 each and 100,000 shares last week at prices that ranged from $50.35 to $50.66 per share, all of which were held indirectly by a trust fund and family limited partnership. Mr. Sanghi currently owns an indirect ownership stake of 4.64 million shares following the recent sales.

The shares of the Chandler-based provider of microcontrollers are up 40% in the past five years, after advancing 10% in 2016 alone. Microchip Technology Inc. (NASDAQ:MCHP) posted net sales of $2.17 billion for fiscal 2016 that ended March 31, up by only 1.2% year-over-year. The increase was mainly driven by the acquisition of Micrel in August 2015, partly offset by weaker economic and semiconductor industry conditions. In early April, the company completed the acquisition of California-based Atmel for roughly $3.47 billion in an attempt to expand its served available market. David Harding’s Winton Capital Management reported owning nearly 394,000 shares of Microchip Technology Inc. (NASDAQ:MCHP) in its latest 13F.

Newfield Exploration Co. (NYSE:NFX) Saw Two Executives Unload Shares Last Week

To begin with, President and Chief Executive Officer Lee K. Boothby discarded 50,000 shares on Thursday at prices that fell between $40.80 and $41.17 per share, cutting his overall holding to 298,596 shares. Senior Vice President of Operations, John H. Jasek, sold 25,000 shares on the same day at a weighted average sale price of $40.93. After the not-so-distant sale, Mr. Jasek continues to own 105,149 shares.

The independent energy company has seen its market capitalization rise by 21% since the beginning of the year. Newfield Exploration Co. (NYSE:NFX) issued 34.5 million shares of common stock through a public offering completed during the first quarter of 2016, which generated net proceeds of roughly $776 million. A portion of those net proceeds were used to repay all the company’s outstanding borrowings under its credit facility and money market lines of credit. Israel Englander’s Millennium Management owned 3.18 million shares of Newfield Exploration Co. (NYSE:NFX) at the end of the March quarter.

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