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

Cheniere Energy Inc. (NYSEMKT:LNG) is another company that had an unusual volume of insider selling activity last week. Chairman, Chief Executive Officer and President Charif Souki offloaded 200,000 shares last week at prices in the range of $45.01-to-$47.66 per share. After this relatively sizable sell-off, the executive holds an ownership stake of roughly 3.50 million shares. Only a few may know that the company’s Louisiana-based gas terminals were initially intended for natural gas imports, but the shale revolution turned everything around. As a result, the Houston-based LNG company is on the way to become the nation’s first exporter of gas from the U.S. shale formations. However, the low oil-price-environment and the high global supply of LNG may put some weight on the nation’s gas exports, which may in turn weaken the demand for facilities like the one owned and operated by Cheniere. In the meantime, the shares of Cheniere Energy have been on a steady slide since May and are down 34% since the beginning of the year. The number of hedge funds monitored by our team with stakes in the company decreased to 76 from 81 during the second quarter, amassing 54.90% of the company’s shares. Seth Klarman’s Baupost Group owned roughly 15.37 million shares of Cheniere Energy Inc. (NYSEMKT:LNG) at the end of the June quarter.

Finally, we will investigate the insider selling activity at biotechnology company Seattle Genetics Inc. (NASDAQ:SGEN). Chief Operating Officer Eric Dobmeier sold 17,452 shares on Friday for $42.5 each. The COO currently holds 80,888 shares, which also include restricted stock units subject to vesting. Director David W. Gryska, who joined the company’s Board in March 2005, cut down his stake by 10,000 shares on Thursday, remaining with 23,950 shares. The 10,000-share block was sold at a weighted average price of $43.57. Seattle Genetics recently disclosed its third-quarter financial results, posting total revenues of $84.1 million, which were up from $79.9 million reported a year ago. These revenues are mainly derived from its marketable drug Adcetris, but the company has been incurring higher research and development costs in relation to the development of its pipeline. As a result, the company’s third-quarter net loss widened year-over-year to $26.4 million from $15.6 million. Meanwhile, the stock is 35% in the green year-to-date, so the aforementioned insiders might have simply decided to cash out a portion of their holdings (e.g. the trading window for these insiders might have just opened). It is also worth mentioning that 16 hedge funds tracked by Insider Monkey had positions in the company at the end of the second quarter, all of which accumulated 26.80% of the company’s shares. Baker Bros. Advisors, founded by Julian Baker and Felix Baker, held a 30.87 million-share position in Seattle Genetics Inc. (NASDAQ:SGEN) on June 30.

Disclosure: None