Nine Insiders at Battered Casual Sit-Down Restaurant Chain Ruby Tuesday Inc. (RT) Buy the Dips, Plus Other Insider Trading

Heavy insider buying is usually viewed as a bullish signal within the investment community, mainly because there seems to be only one reason corporate insiders are buying shares in their own companies. Unlike most indicators based on historical data, insider buying mostly serves as a forward-looking indicator. Security purchases on the part of insiders show their belief that their company’s stock is worth much more than current available price levels.

Past research, analysts with acumen in insider trading, as well as experts on insider trading suggest that clusters of insider buying are a lot more worthwhile and informative than single buys. As Dr. Inan Dogan, the founder of Insider Monkey and a seasoned researcher in the field of insider trading, said in an interview conducted a little while ago: “One insider might overestimate a company’s prospects, but there is higher uncertainty when many insiders are buying.” That being said, the following article will reveal a massive cluster of insider buying observed at one company, as well as discuss other noteworthy insider transactions reported with the SEC on Thursday.

At Insider Monkey, we track around 750 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details).

Syda Productions / Shutterstock.com

CEO of Struggling Industrial-Product Maker Buys Shares After Earnings Release

To start with, the man in charge of Actuant Corporation (NYSE:ATU) filed Thursday to disclose the purchase of a relatively ample block of shares. President and Chief Executive Officer Randal W. Baker bought 10,000 Class A shares on Tuesday at prices varying from $22.53 to $22.55 per share. Following the recent purchase, Mr. Baker currently owns an aggregate of 79,376 shares.

The insider buying comes shortly after the industrial-product maker posted top- and bottom-line declines for its fourth quarter that ended August 31, reflecting a “tepid demand environment” according to the CEO. Actuant Corporation (NYSE:ATU)’s fourth-quarter sales fell by 8% year-over-year to $276 million despite a 4% net benefit from acquisitions and divestitures. More importantly, the company’s core sales, sales excluding the impact of acquisitions, divestitures and foreign currency rate changes, dropped 11% year-over-year. The shares of the industrial-product maker are 9% in the red thus far in 2016. Mason Hawkins’ Southeastern Asset Management was the owner of 6.41 million shares of Actuant Corporation (NYSE:ATU) at the end of the second quarter.

Several sets of noteworthy insider buying and selling will be discussed in more detail on the next two pages of this article. 

Nine Insiders at Battered Casual Sit-Down Restaurant Chain Purchase Shares

A shouting number of nine Board members and executives at Ruby Tuesday Inc. (NYSE:RT) purchased shares this week. Nonetheless, let’s have a look at the purchases conducted by the company’s management team only. To begin with, Chief Financial Officer Sue Briley purchased 7,500 shares on Tuesday at $2.70 apiece, lifting her overall holding to 35,287 shares. Chief People Officer Thomas Anderson Williams snatched up 10,000 shares on the same day at prices that fell in the range of $2.64 and $2.67 per share. Mr. Williams currently owns 27,997 shares following the recent purchase. Chief Marketing Officer David Skena added 5,000 shares at $2.65 apiece to his aggregate holding that currently comprises 39,488 shares. More importantly, Interim CEO F. Lane Cardwell Jr. snapped up 50,000 shares on Tuesday at prices ranging from $2.69 to $2.75 per share, a purchase that boosted his ownership to 126,256 shares. Last but not least, Chief Legal Officer Rhonda J. Parish bought 10,000 shares at a weighted average price of $2.79 a share. Ms. Parish currently holds an ownership stake of 48,238 shares.

The casual sit-down restaurant chain operating in the bar and grill segment of the casual dining industry has seen its market capitalization plunge by 48% since the start of the year. In the most recent quarter that ended August 30, Ruby Tuesday Inc. (NYSE:RT)’s revenue fell by 8.2% year-over-year to $256.7 million, partly due to a net reduction of 109 company-owned restaurants. The company’s same-restaurant sales dropped by 2.7%, reflecting a decline in guest traffic due to a “challenging and competitive external environment.” Does the massive cluster of insider buying suggest that the struggling casual sit-down restaurant chain is about to turn its business around? Only time can tell. Royce & Associates, founded by Chuck Royce, reported owning 2.25 million shares of Ruby Tuesday Inc. (NYSE:RT) in its 13F for the June quarter.

More Insider Buying at Struggling Galvanizing and Electrical Products Company

Soon after AZZ Inc. (NYSE:AZZ)’s CEO and President, Thomas E. Ferguson, purchased 7,500 shares on Monday, another member of the company’s executive team bought some shares this week. Robert J. Steines, Chief Accounting Officer and Vice President since mid-November 2013, snapped up 1,000 shares on Thursday at a price tag of $54.54 each. After the recent purchase, Mr. Steines currently holds an ownership stake of 2,625 shares.

The emerging cluster of insider buying at the galvanizing and electrical products company has been fueled by the disappointing financial results for the second quarter of fiscal 2017 that ended August 31. Although for AZZ Inc. (NYSE:AZZ)’s second-quarter tends to be seasonally weak, this quarter’s results disappointed to the extent that the management lowered full-year guidance. AZZ operates as a provider of galvanizing services, welding solutions, specialty electrical equipment, and services to the power generation, transmission, distribution, refining, and industrial markets. The company’s management anticipates full-year fiscal 2017 performance to “fall slightly below” the previous earnings-per-share guidance of $3.15-$3.45 and revenue guidance of $930 million-to-$970 million. Jim Simons’ Renaissance Technologies LLC had 43,600 shares of AZZ Inc. (NYSE:AZZ) in its portfolio at the end of the April-to-June quarter.

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

Board Member of Well-Known Athletic Retailer Offloads Shares

One member of Foot Locker Inc. (NYSE:FL)’s boardroom offloaded a block of shares this week. Board member Cheryl N. Turpin liquidated 10,000 shares on Wednesday at prices that varied from $69.06 to $69.45 per share. After the recent sale, Ms. Turpin currently holds an ownership stake of 40,858 shares.

Foot Locker Inc. (NYSE:FL), one of the largest athletic footwear and apparel retailers in the world, has seen the value of its shares increase by 5% since the start of the year. The company operated 3,401 stores at the end of July, up from 3,383 stores at the end of January. In late September, analysts at JPMorgan added Foot Locker Inc. (NYSE:FL) to their “focus list” and raised their price target on the stock to $79 from $76. JPMorgan analysts said that the athletic retailer’s model is well-positioned in a “growing-pie athletic segment (health & wellness tailwind + casualization shift).” Moreover, the analysts pointed out that the company’s foot traffic is positive, outstripping the negative low to mid-single-digit mall traffic. Ken Griffin’s Citadel Advisors LLC reported owning 1.33 million shares of Foot Locker Inc. (NYSE:FL) in its 13F filing for the second quarter.

Board Member of Strong Performing Digital-Graphics Specialist Sells Some Shares

A member of NVIDIA Corporation (NASDAQ:NVDA)’s Board of Directors also discarded some shares this week. Board member Persis S. Drell liquidated 2,361 shares on Wednesday at prices that fell in the range of $66.58 and $66.59 per share. After the recent sale, Dr. Drell currently holds an ownership stake of 27,152 shares.

The shares of the well-known digital-graphics specialist have gained an impressive 98% year-to-date. It is important to note that the surge in NVIDIA Corporation (NASDAQ:NVDA)’s share price has followed a gradual progression, pointing to investors’ favorable sentiment toward the company. The graphics processing unit specialist reported revenue of $1.43 billion for the three months that ended July 31, marking an increase of 24% year-over-year. Growth in the company’s top line was driven by strong demand for GPUs for gaming, datacenter and professional visualization, as well as for Tegra automotive systems. Drew Cupps’ Cupps Capital Management trimmed its stake in NVIDIA Corporation (NASDAQ:NVDA) by 10% during the September quarter to 30,323 shares.

Disclosure: None