Servicemaster Global Holdings Inc. (SERV) CEO Unloads Over 75% of Shares, Plus Heavy Insider Buying at 4 Companies

A standard rule of thumb in the financial markets is that insider buying indicates that corporate insiders believe their own companies’ shares are severely undervalued. By the same token, heavy insider selling is usually perceived as a bearish signal. However, insider selling should be interpreted with more caution. The main problem with insider selling revolves around the fact that Board members and executives sell shares for a wide variety of reasons that may not necessarily be related to the future prospects or current valuations of their companies.

All in all, investors need to keep in mind that insiders can sell shares for various reasons, not simply because they anticipate a share price drop. Insider trading watchers would also be wise to pay attention to what Phil Roth, a senior technical analyst for Miller Tabak & Co., had to say about insider trading: “It is important to remember that most insiders are investors, not traders and they tend to buy shares in the company when they are cheap and sell when they are expensive. They are not as motivated by trends as are traders. Insider transactions have proven to be a better buy than sell indicator in my experience…”

That being said, let’s have a look at a set of noteworthy insider transactions reported with the SEC on Wednesday.

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Board Member at Struggling In-Flight Connectivity Provider Buys More Shares

Let’s kick off our discussion by looking into the recent insider buying observed at Gogo Inc. (NASDAQ:GOGO). Board member Charles C. Townsend acquired 300,000 shares on Monday at prices varying from $9.60 to $9.76 per share, all of which are held by the Charles C. Townsend III Trust. After the somewhat sizable purchase mentioned above, Mr. Townsend holds an indirect ownership stake of 654,267 shares through the aforementioned trust fund.

The provider of in-flight connectivity and wireless in-cabin digital entertainment solutions has seen the value of its shares plummet by 49% since the start of the year. Revenue earned through Delta Air Lines Inc. (NYSE:DAL) and American Airlines Group Inc. (NASDAQ:AAL) accounted for half of Gogo Inc. (NASDAQ:GOGO)’s revenue for the three months ended September 30. The high reliance on these two customers can be viewed as a source of great concern for investors. In early-June, Gogo told investors that around 550 of American Airlines’ planes with its equipment installed were “subject to deinstallation at any time at American’s option.” More importantly, Gogo said that it anticipated American Airlines to exercise that right for many or even all of those aircraft “from time to time over the next several years.” Matthew Tewksbury’s Stevens Capital Management added a 10,499-share stake in Gogo Inc. (NASDAQ:GOGO) to its portfolio during the September quarter.

In the next two pages of this article, we’ll discuss more insider transactions reported during the day U.S. citizens selected Donald Trump as the nation’s next president.

Cluster of Insider Buying at Supplier to Aerospace Industry After Earnings Release

Three different executives at Triumph Group Inc. (NYSE:TGI) piled up shares on the open market earlier this week. To start with, President and Chief Executive Officer Daniel J. Crowley acquired 50,000 shares on Monday at prices that fell between $25.20 and $26.15 per share, a purchase that boosted his overall holding to 389,567 shares. Thomas K. Holzthum, Executive Vice President of Integrated Systems, snatched up 10,000 shares on the very same day at a price tag of $25.50 each. Following the recent purchase, Mr. Holzthum currently owns an aggregate of 24,076 shares. Lastly, Richard R. Lovely, Senior Vice President of Human Resources, acquired a new stake of 2,000 shares on Monday at a price of $25.13 per share.

Triumph Group Inc. (NYSE:TGI), a major supplier to the aerospace industry, has lost 29% of its market value since the start of the year. Earlier this year, the company announced plans to restructure certain of its businesses, as well as consolidate certain facilities. As part of the restructuring plans, Triumph Group anticipates reducing its footprint by around 3.5 million square feet and reducing the company’s head count by 1,200 employees. Just recently, the company reported net sales of $874.8 million for the second quarter of its fiscal 2017 ended September 30, which marked a decrease of 8.4% year-over-year. Triumph Group also lowered its fiscal 2017 revenue guidance to $3.5 billion-to-$3.6 billion from the previous guidance of $3.6 billion-to-$3.7 billion. Charles Paquelet’s Skylands Capital reported owning 58,700 shares of Triumph Group Inc. (NYSE:TGI) through the current round of 13F filings.

Board Members of Attractive Communications Company Buy Shares

Two members of Centurylink Inc. (NYSE:CTL)‘s Board boosted their holdings in the company at the beginning of the week. William A. Owens, member of the company’s Board of Directors since July 2009, bought 42,800 shares on Monday at prices varying from $23.23 to $23.42 per share, lifting his ownership to 95,275 shares. Martha Helena Bejar, yet another member of Centurylink’s Board, acquired 8,250 units of common stock on Monday for $23.41 each. After the recent acquisition, Ms. Bejar currently holds an ownership stake of 13,109 shares.

The insider buying at the integrated communications company focused on providing services to residential and business customers is one of several possible catalysts for the stock in the near-term. Just recently, analysts at Oppenheimer & Co. upgraded the communications company to ‘Outperform’, suggesting that Centurylink Inc. (NYSE:CTL) represents a better buying opportunity than AT&T Inc. (NYSE:T). Oppenheimer analysts are partly attracted by Centurylink’s current quarterly dividend of $0.54 per share, which yields 8.89% annually. Centurylink’s dividend yield is higher by around 4 percentage points compared to AT&T’s yield, and Oppenheimer analysts anticipate the spread to converge back to the historical average of around 2 percentage points (which suggests that Centurylink’s yield could fall through the stock rising in value). Centurylink shares are 3% in the red this year. David Harding’s Winton Capital Management was the owner of 338,232 shares of Centurylink Inc. (NYSE:CTL) at the end of the third quarter.

The final page of this article will discuss the insider trading observed at two other companies.

Board Members at Independent Energy Company Boost Their Equity Holdings

Two Board members of Apache Corporation (NYSE:APA) also snapped up some shares this week. Chansoo Joung, who joined the company’s Board of Directors in February 2011, bought 15,000 shares on Wednesday at prices that ranged from $57.97 and $58.06 per share. Mr. Joung currently owns an aggregate of 45,285 shares. John E. Lowe, Non-Executive Chairman of the company’s Board, acquired 2,132 shares on Monday at $57.65 apiece, a purchase that lifted his holding to 7,500 shares.

The independent energy company has seen the value of its shares rise by 30% since the beginning of the year. Apache Corporation (NYSE:APA) has exploration and production operations in the United States, Canada, Egypt, and offshore of the United Kingdom in the North Sea. The company reported a loss of $607 million for the third quarter, compared to a loss of $4.1 billion recorded for the same period of the previous year. The net losses for both periods reflected asset impairments resulting from the significant drop in crude oil prices starting in late-2014. Ray Dalio’s Bridgewater Associates owns 104,800 shares of Apache Corporation (NYSE:APA) as of September 30.

CEO of Residential and Commercial Services Provider Sells Massive Amount of Shares

The man in charge of Servicemaster Global Holdings Inc. (NYSE:SERV) discarded two sizable blocks of shares earlier this week. Chief Executive Officer Robert J. Gillette liquidated 150,000 shares on Tuesday and 193,750 shares on Wednesday at prices ranging from $36.00 to $36.86 per share. Mr. Gillette currently holds a stake of 100,615 shares following the recent transactions.

The insider selling comes shortly after the residential and commercial services provider released its financial results for the third quarter at the end of October. Servicemaster Global Holdings Inc. (NYSE:SERV) reported revenue of $758 million for the quarter, which was an increase from $706 million recorded a year prior. The increase in the company’s top-line mainly reflected organic growth at American Home Shield, the impacts of acquiring Alterra Pest Control LLC last November and OneGuard Home Warranties in June, as well as organic revenue growth of 2% at Terminix. Scopia Capital Management, founded by Matt Sirovich and Jeremy Mindich, was the owner of 3.07 million shares of Servicemaster Global Holdings Inc. (NYSE:SERV) at the end of June.

Disclosure: None