Strong Insider Selling Activity Detected: Cheniere Energy Inc. (LNG) and Others

Generally, insider trading activity represents an important tool in the process of fundamental security analysis, as it can offer some insights on how insiders feel about the prospects of their companies. Unquestionably, There are people who believe that insider selling does not suggest anything, but this line of thought may not be entirely accurate. Insider selling activity does not necessarily point to short-selling opportunities, but it may offer a general picture of how insiders feel about their companies’ stock. Why would an insider sell shares now when he/she anticipates stock price appreciation in the months ahead? There are emergency cases when insiders would not pay attention to how undervalued or overvalued a stock is; but, like many other financially conscious people, they would most likely wait a few more months so as to make more money on the stocks they own. Having this in mind, the following article will examine the insider selling activity at three companies.

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Prior to discussing the insider trading activity, let’s make you familiar with what Insider Monkey does besides providing high-quality articles. At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning 102% and beating the market by more than 53 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks.

Let’s begin the so-called investigation by looking into the insider trading activity at Orthofix International NV (NASDAQ:OFIX). Chief Administrative Officer Jeffrey M. Schumm sold 15,000 shares this Friday at prices ranging from $40.15-to-$40.36, cutting his stake to 68,882 shares. Chief Executive Officer Brad Mason also unloaded 15,018 shares on the same day at prices between $40.11 and $41.47 per share. Following the recent transaction, the CEO currently holds 140,256 shares. The shares of the medical device company are 37% in the green year-to-date, partly thanks to its strong financial performance in the third quarter. Orthofix International NV (NASDAQ:OFIX) reported third-quarter net sales of $101.15 million, compared to $100.99 million reported a year ago. Its adjusted net income from continuing operations came to $5.7 million or $0.30 per diluted share, compared with $3.3 million or $0.17 per diluted share posted in the third quarter last year. In the meantime, 19 hedge funds observed by Insider Monkey had stakes in the company at the end of the second quarter, accumulating 39.10% of its outstanding common stock. Conan Laughlin’s North Tide Capital had one of the largest positions in Orthofix International NV (NASDAQ:OFIX) among these hedge funds on June 30, owning 1.5 million shares.

The second page of this article discloses the insider selling activity at Cheniere Energy Inc. (NYSEMKT:LNG) and Seattle Genetics Inc. (NASDAQ:SGEN).