These Companies’ Insiders Don’t Fear Fed Tightening; Should One Follow Their Lead?

All major U.S. stock indexes closed in the red on Wednesday, being dragged down by the falling energy equities. It might seem shocking to most of us how quickly stock market sentiment switches around. Most market participants have started to worry about a highly-probable rate hike this year, and its effects on the U.S. economy and stock markets in particular, but one should bear in mind that it may take quite some time until higher interest rates will make other asset classes’ returns attractive enough to propel investors to pull out their money from equities. Meanwhile, some companies have seen their insiders piling up more shares, which could somewhat suggest that these companies are prone to having a great future ahead. Even though the Securities and Exchange Commission was closed for Veterans Day on Wednesday and no filings were published, we will still analyze the insider buying activity of several companies that saw their insiders submit Form 4 filings on Monday and Tuesday.

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SciQuest Inc. (NASDAQ:SQI) has seen its top executive acquire more shares over the past several days. Stephen J. Wiehe, Chief Executive Officer and President since February 2001, reported purchasing 1,600 shares last Friday and 15,400 shares on Monday at prices in the range of $11.86-to-$12.1 per share, boosting his overall holdings to 635,603 shares. The provider of cloud-based business automation solutions for spend management released a strong third-quarter earnings report in late-October, which has positively impacted the company’s stock performance. SciQuest Inc. (NASDAQ:SQI) reported non-GAAP diluted net income per share of $0.08 on revenues of $26.3 million, compared with diluted net income per share of $0.07 on revenues of $25.9 million posted last year. Even so, the stock is still 15% in the red year-to-date, so the CEO’s bullishness might suggest his confidence in the company’s future prospects. The number of hedge funds monitored by Insider Monkey with positions in the company climbed to 13 from 11 during the second quarter, amassing approximately 15.30% of its outstanding shares on June 30. Robert G. Moses’ RGM Capital was the top equity holder of SciQuest Inc. (NASDAQ:SQI) within our database at the end of the second quarter, holding 2.45 million shares.

Let’s head to the next page of the article, where the insider buying activity at Men’s Wearhouse Inc. (NYSE:MW) and Continental Building Products Inc. (NYSE:CBPX) is disclosed and discussed.

Specialty apparel retailer Men’s Wearhouse Inc. (NYSE:MW) saw two of its Directors purchase shares this Monday. Director David H. Edwab purchased 11,000 shares at prices ranging from $21.90-to-22.04 per share and currently holds an ownership stake of 29,305 shares. Director B. Michael Becker purchased two blocks of 2,000 shares at a price of $23 per share, one of which is held by a Simplified Employee Pension (SEP) plan, while the other is held via an Individual Retirement Account (IRA). The Director also holds a direct ownership stake of 3,189 shares, along with an additional 4,659 shares held through a trust fund. The shares of the men’s-clothing retailer tanked on November 6, when the company released its preliminary disappointing third-quarter sales and its earnings guidance for the third quarter and full-year. The company reduced its third-quarter earnings guidance to the range of $0.46-to-$0.51, down from the previously-anticipated target of $0.87. Men’s Wearhouse anticipates its full-year 2015 EPS to be in the range of $1.75-to-$2.00, compared to its previous guidance of $2.70-to-$2.90. As a result, the stock is down slightly over 51% year-to-date. 33 hedge funds monitored by our team owned the stock at the end of the June quarter, accumulating 37.50% of the company’s outstanding shares. Ricky Sandler’s Eminence Capital owned 3.19 million shares of Men’s Wearhouse Inc. (NYSE:MW) on June 30.

Lastly, let’s take a look at the insider buying activity at Continental Building Products Inc. (NYSE:CBPX). Timothy Power, Senior Vice President, General Counsel and Secretary since August 2013, snapped up 5,000 shares on Monday at a price of $17.21 per share, lifting his stake to 15,470 shares. The shares of the manufacturer of gypsum wallboard and complementary finishing products are up 2% year-to-date, but several financial services hubs believe that the stock has more room to run. Earlier this month, RBC Capital Markets reiterated its ‘Outperform’ rating on the stock and lowered its price target to $26 from $27, which yields an upside potential of 43%. On November 4, Continental Building Products reported third-quarter adjusted earnings per share of $0.25 on net sales of $108.2 million, compared to adjusted EPS of $0.22 on net sales of $113.8 million reported last year. The number of hedge funds bullish on the company at the end of the second quarter stood at 21, compared to 18 registered in the prior one. Charles Paquelet’s Skylands Capital upped its stake in Continental Building Products Inc. (NYSE:CBPX) by 49,450 shares to 282,850 shares during the September quarter.

Disclosure: None