O’Reilly Automotive Inc. (ORLY), GE and Baxter Witness Insider Buying; 2 Other Companies See Executives Unload Shares

The investment community is well aware that there are two kinds of insider trading: legal and illegal. The media has been discussing loud cases of illegal insider trading on a consistent basis, but not all forms of insider trading are illegal. Legal insider trading occurs when corporate insiders play by the rules set out the U.S. Securities and Exchange Commission when buying or selling shares of their own companies. Conversely, illegal insider trading involves transactions executed by directors and executives who had access to material non-public information related to acquisition announcements, earnings releases and other significant news unknown to the general public. As most corporate insiders have superior knowledge about their companies’ business developments, current challenges and future prospects than any of us, their transactions tend to be highly scrutinized by the investment community. For that reason, the following article will discuss several notable legal insider transactions reported with the SEC on Tuesday.

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 CEO of This Industrial Conglomerate Bought a Massive Block of Shares Last Week

General Electric Company (NYSE:GE)’s Chairman and Chief Executive Officer, Jeffrey R. Immelt, acquired 67,600 shares on Friday at a price of $29.59 per share. After the recent purchase, Mr. Immelt currently holds a stake of 2.16 million shares.

Earlier this week, the global digital industrial company announced plans to make investments worth at least $1.4 billion in Saudi Arabia, as the Persian Gulf kingdom intends to reduce its dependence on crude oil. The U.S. industrial conglomerate plans to double its workforce in the kingdom to 4,000 positions by 2020. Just recently, the Saudi government announced several reforms aimed at diversifying its economy away from petroleum products and General Electric Company (NYSE:GE) appears to have the suitable tools to assist the country achieve its goals. GE shares are down 2% thus far in 2016. The number of hedge funds from our system with stakes in GE increased to 64 from 54 during the first quarter of 2016. Nelson Peltz’s Trian Partners was the owner of 74.25 million shares of General Electric Company (NYSE:GE) at the end of March.

The next two pages of this insider trading article will discuss several noteworthy insider transactions registered at four separate companies.

Freshly-Appointed CEO of Baxter Acquired New Stake Earlier This Week

Jose E. Almeida, the Chairman and Chief Executive Officer of Baxter International Inc. (NYSE:BAX) since January 2016, purchased a new stake of 11,691 shares on Monday at prices that ranged from $42.74 to $42.76. In the second half of 2015, the medical devices marker reached a settlement agreement with Dan Loeb’s Third Point LLC, giving the activist shareholder a seat on its Board of Directors and a role in the search for a new CEO that picked Mr. Almeida.

The maker of dialysis machines and medical products has seen its market value gain 14% since the start of the year. Baxter International Inc. (NYSE:BAX), which spun-off its pharmaceutical operations into Baxalta Inc. (NYSE:BXLT) in the summer of 2015, needs to inject new dynamism into its slow-growing revenue base. The company’s total net sales for the first quarter were $2.38 billion, down from $2.40 billion reported for the same quarter of 2015. The decrease in Baxter’s top-line figure was mainly driven by foreign currency headwinds. Third Point LLC owned 53.85 million shares of Baxter International Inc. (NYSE:BAX) at the end of the first quarter, which were worth $2.21 billion.

This Automotive Aftermarket Specialty Retailer Saw an Executive Buy Some Shares This Week

Tony E. Bartholomew, Senior Vice President of Professional Sales at O’Reilly Automotive Inc. (NASDAQ:ORLY), purchased 1,700 shares on Monday at a price of $256 per share, lifting his overall holding to 15,981 shares. Mr. Bartholomew also holds an indirect ownership stake of 5,570 shares, which are held in the company’s 401k plan.

The shares of the U.S. automotive aftermarket specialty retailer have advanced by 2% since the beginning of 2016. O’Reilly Automotive Inc. (NASDAQ:ORLY)’s sales for the first three months of 2016 were $2.10 billion, up by $194 million year-over-year. Meanwhile, comparable store sales for stores open at least 12 months rose 6.1% year-on-year, after increasing 7.2% in the same quarter of 2015. The increase in comparable store sales was mainly attributable to the increasing complexity and cost of replacement parts for the current pool of more technically advanced vehicles. There were 42 asset managers tracked by Insider Monkey with long positions in the company at the end of March. Robert Joseph Caruso’s Select Equity Group reported owning 1.10 million shares of O’Reilly Automotive Inc. (NASDAQ:ORLY) in its latest 13F filing.

This Provider of Pet Health Care Services Has Seen Increased Insider Selling as of Late

To begin with, VCA Inc. (NASDAQ:WOOF)’s Senior Vice President of Development, Neil Tauber, discarded 2,217 shares on Monday and 47,783 shares on Tuesday at prices varying from $64.00 to $64.72 per share, trimming his ownership to 126,378 shares. More importantly, Arthur J. Antin, Co-Founder, Chief Operating Officer and Senior Vice President, offloaded a whopping amount of 200,000 shares last Wednesday at prices ranging from $63.75 to $64.48 per share, all of which were held in a trust fund that currently owns 284,778 shares. Mr. Antin also holds a direct ownership stake of 70,870 shares.

The provider of pet health care services has seen its shares gain an impressive 181% in the past five years and 23% in the past year alone. In early May, VCA Inc. (NASDAQ:WOOF) acquired an 80% ownership interest in Companion Animal Practices, North America (CAPNA) for roughly $344 million. Nevada-based CAPNA operates a network of 56 free standing animal hospitals. Larry Robbins’ Glenview Capital trimmed its stake in VCA Inc. (NASDAQ:WOOF) by 23% during the January-to-March period to 4.88 million shares.

This Kidney Care Company Registered a Cluster of Insider Selling Last Week

DaVita HealthCare Partners Inc. (NYSE:DVA) registered a cluster of insider selling in the past few weeks, but some insider selling was connected to freshly-vested stock appreciation rights or was conducted under pre-arranged trading plans. So let’s have a look at the spontaneous and informative insider sales only. Chairman and Chief Executive Officer Kent J. Thiry sold 32,880 shares on Friday at a weighted average sale price of $76.99, cutting his direct ownership to 39,184 shares. Dennis L. Kogod, Chief Executive Officer of DaVita International and President of the Healthcare Partners division, unloaded 7,700 shares last Tuesday at an average price of $77.35. After the not-so-distant sale, Mr. Kogod currently owns 18,766 shares.

In early March, the provider of kidney care services completed its previously-announced acquisition of a nationally-recognized physician group called the Everett Clinic Medial Group, which involved the acquisition of Everett’s 20 care sites north of Seattle. Shares of DaVita HealthCare Partners Inc. (NYSE:DVA) are 10% in the green year-to-date. A total number of 37 hedge fund vehicles monitored by our team were invested in the company at the end of March, amassing roughly 28% of the company’s outstanding shares. Warren Buffett’s Berkshire Hathaway had 38.57 million shares of DaVita HealthCare Partners Inc. (NYSE:DVA) among its equity holdings at the end of the first quarter.

Disclosure: None