Noteworthy Insider Trading Activity Witnessed at Beazer Homes USA Inc. (BZH) and 4 Other Companies

Last week’s dollar value of insider purchases decreased significantly from the massive volume of insider buying recorded during the week prior to that, which was primarily driven by voluminous insider purchases at United Continental Holdings Inc. (NYSE:UAL). Meanwhile, last week’s dollar volume of insider selling quadrupled week-over-week. The insider trading behavior observed last week may not be great news for insider trading watchers, so it remains to be seen how insider trading indicators will evolve over the next couple of weeks. Unlike many of our previous insider trading articles that focused on insider buying and selling separately, this article will focus on five companies with either form of noteworthy insider trading. Precisely, the article will discuss three companies with insider buying activity, as well as two companies with notable insider selling activity.

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).

Bank of the Ozarks Had Two Board Members Buy Shares This Past Week

According to a fresh Form 4 filing, Bank Of The Ozarks Inc. (NASDAQ:OZRK)’s Board member Nicholas A. Brown bought 2,900 shares on Thursday at a weighted average cost of $36.86, lifting his overall holding to 8,089 shares. Director Ross M. Whipple snapped up 120,000 shares on the same day at prices varying from $37.55 to $37.93 per share, of which 100,000 shares are held indirectly through LLLP. After the recent purchase, Mr. Whipple currently owns a direct ownership stake of 74,975 shares, as well as an indirect ownership position of 700,000 shares via LLLP.

The recent insider buying comes shortly after Carlson Block, Chief Investment Officer of investment research firm Muddy Waters, presented a bearish investment thesis on the Arkansas-based bank holding company at the 2016 Ira Sohn conference last week. Mr. Block claimed that Bank Of The Ozarks Inc. (NASDAQ:OZRK) has provided too many construction loans in real estate markets that seem to have peaked already, including New York and San Francisco. “When there are downturns in real estate lending markets, their balance sheet really could come under severe pressure”, said Muddy Waters’ CIO. Shares of the bank are down by 24% year-to-date. BlueCrest Capital Mgmt, founded by Michael Platt and William Reeves, acquired a new stake of 30,684 shares of Bank Of The Ozarks Inc. (NASDAQ:OZRK) during the March quarter.

On the next two pages of this article we’ll discuss noteworthy insider purchases and sales witnessed at four other companies.

Beazer Homes’ Chairman Acquires Large Block of Shares Amid Earnings Disappointment

Non-Executive Chairman of Beazer Homes USA Inc. (NYSE:BZH), Stephen P. Zelnak Jr., purchased 30,000 shares on Wednesday and 25,000 shares on Thursday for $7.25 each, boosting his ownership to 191,920 shares. The shares of the diversified homebuilder are down by 37% year-to-date, which partly reflects “uncertainty in the broader economy” that caused “an uneven start to the spring selling season” at Beazer Homes USA Inc. (NYSE:BZH), according to the company’s latest earnings report. The impact of this uncertainty could be noticed in those financial results for the second quarter of fiscal year 2016 ended March 31, which showed that Beazer’s total number of new-home orders decreased by 9.4% during the quarter to 1,538. The company’s aggregate dollar value of homes in its backlog for the quarter also dropped by 5.1% year-over-year to $773.0 million, while cancellation rates climbed to 17.6% from 16.7%. Nonetheless, the company’s homebuilding revenue for the fiscal second quarter grew by 31.8% year-over-year to $377.26 million. David Keidan’s Buckingham Capital Management upped its position in Beazer Homes USA Inc. (NYSE:BZH) by 41% during the January-to-March quarter, to nearly 931,000 shares.

Myers Industries Had Two Insiders Purchase Shares Last Week, Including Newly-Appointed CEO

To start with, Jane Scaccetti, Board member at Myers Industries Inc. (NYSE:MYE), purchased a new stake of 2,800 shares on Thursday at $13.70 apiece. More importantly, R. David Banyard, elected as the company’s President and Chief Executive Officer in December, acquired a new stake of 10,000 shares on Thursday at prices that fell between $13.64 and $14.00 per share, followed by another purchase of 10,000 shares on Friday at prices ranging from $13.80 to $13.88 per share.

The manufacturer of polymer products has seen its market value gain nearly 7% since the beginning of 2016. The management of Myers Industries Inc. (NYSE:MYE) anticipates 2016 revenue to be between flat and a low-single-digit dip on a constant currency basis, mainly owing to weak demand conditions across certain end-markets. Despite sustained pressure on its top-line results, the company has been able to drive up its bottom-line figures due to operational improvements and from the positive impact of input costs. Jim Simons’ Renaissance Technologies had 32,400 shares of Myers Industries Inc. (NYSE:MYE) in its portfolio at the end of 2015.

Cliffs Natural Resources Saw Lead Director Jettison Nearly Entire Stake Last Week

Lead Director of Cliffs Natural Resources Inc. (NYSE:CLF)’s Board, Douglas C. Taylor, sold 576,470 shares on Wednesday, 2.06 million shares on Thursday, and 4.60 million shares on Friday, at prices that ranged from $3.50 to $4.61 per share, remaining with a mere 72,319 shares when the spate of selling was done. Mr. Taylor co-founded New York-based hedge fund Casablanca Capital LP, which is currently in the process of closing down following the death of co-founder Donald G. Drapkin, so the aforementioned sales were part of the firm’s winding down process.

The shares of the mining and natural resources company were up by 233% year-to-date through the end of April, but are now up by about 122% following a disappointing performance in the past five trading sessions due to a weak manufacturing report out of the world’s second-largest economy, China. The recent rally in metals and mining stocks has been fueled by a weakening U.S dollar, recovering hopes for the Chinese economy, and the recovery of certain commodities. Philippe Laffont’s Coatue Management owned 2.37 million shares of Cliffs Natural Resources Inc. (NYSE:CLF) on December 31.

Ecolab Had Two Insiders Unload Shares This Past Week

Dr. Larry Berger, Executive Vice President and Chief Technical Officer at Ecolab Inc. (NYSE:ECL), filed Friday to disclose the sale of 11,590 shares at prices that ranged from $116.31 to $116.35 per share. After the recent sale, Dr. Berger currently owns 27,729 shares. Furthermore, Director Jerry A. Grundhofer discarded 15,000 units of common stock on Friday at prices varying between $116.37 and $116.92 per unit, cutting his overall holding to 62,307 shares.

The provider of water, hygiene, and energy technologies and services has seen its shares advance by 2% since the beginning of 2016. Ecolab Inc. (NYSE:ECL) has paid cash dividends for 79 consecutive years and currently pays out a quarterly cash dividend of $0.35 per share, which equates to an annual dividend yield of 1.20%. In late March, analysts at Credit Suisse assigned a ‘Neutral’ rating on Ecolab and increased their price target on the stock to $109 from $107, citing sustained concerns over the company’s energy business but long-term positive views on its institutional and industrial segments. Barry Dargan’s Intermede Investment Partners acquired a new stake of 156,472 shares of Ecolab Inc. (NYSE:ECL) during the March quarter.

Disclosure: None