These Companies Saw Interesting Insider Buying and Selling Activity

The US stock market opened in the red today, dragged down by declines in mining stocks and lower oil prices.  Meanwhile, ahead of Janet Yellen’s speech at Jackson Hole on Friday, analysts are trying to predict whether the Fed will increase interest rates in September, although the market currently sees just a 21% probability of a hike.

In the meantime, yesterday was a quiet day in terms of insider activity, with roughly 65 transactions involving the sale of shares and around 30 buying transactions. Following the activity of insiders can provide an outside investor with additional information while assessing their next stock pick. Insiders include company employees, board members or large shareholders, who, even though they are not allowed to trade shares on non-public information, still have a better understanding of their company and the processes that are going on there than other investors. In fact, academic research showed that imitating some insider activity, especially on the buy side, can generate above-the-market returns (see more details here).

Having this in mind, we are going to discuss some of the more important insider transactions that took place in the last couple of days. In addition, we will include the hedge fund sentiment towards each company. We assess the hedge fund sentiment based on the popularity of a stock among some 750 smart money investors in our database. This metric is the key part of our own investment strategy that involves identifying the most popular small-cap stocks at the end of a particular quarter (more about our strategy here).

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Let’s start with ChannelAdvisor Corp (NYSE:ECOM), which registered insider activity on both sides. On Tuesday, Mark Cook, the company’s Chief Financial Officer, bought 10,000 shares in one transaction at $12.26 per unit. Following the acquisition, Cook directly holds 100,529 shares of ChannelAdvisor Corp (NYSE:ECOM). Meanwhile, Scott M. Wingo, the Executive Chairman of ChannelAdvisor, sold 60,000 shares in two transactions on Monday and Tuesday at average prices of $12.17 and $12.21 per share, respectively. Wingo reduced his direct-ownership stake to slightly above 1.00 million shares following the recent sales. ChannelAdvisor Corp (NYSE:ECOM)’s stock has lost 11% since the beginning of the year, having plunged by over 20% since August 4, when the company reported a net loss of $0.26 per share for the second quarter, worse than the expected loss of $0.14 per share, although revenue of $27.09 million slightly topped analysts’ estimates. Among the investors we track, nine funds held around 4% of ChannelAdvisor Corp (NYSE:ECOM)’s outstanding shares at the end of June, down from ten funds a quarter earlier.

The producer of aftermarket automotive parts Advance Auto Parts, Inc. (NYSE:AAP) saw two insiders buy shares on Monday and Tuesday. Board director John Francis Ferraro bought 500 shares on Monday at $160.28 apiece and holds 2,941 shares following the transaction. The following day, Advance Auto Parts, Inc. (NYSE:AAP)’s CEO Thomas Greco reported the acquisition of 6,250 shares at $159.56 per unit, having raised his holding to 42,154 shares. Both transactions come less than a week after Advance Auto Parts reported its results for the second quarter, which included EPS of $1.90, which was $0.23 lower than expected, while revenue of $2.26 billion topped the consensus estimate by $20 million. The company also posted a comparable-store sales decline of 4.1% and a 110 basis-point drop in gross margin rate, to 44.8%. The number of funds in our database bullish on Advance Auto Parts, Inc. (NYSE:AAP) increased by five to 51 during the second quarter and the majority of those shareholders boosted their exposure to the stock between April and June. Moreover, Advance Auto Parts has activist Jeff Smith of Starboard Value as the Independent Chairman of its Board and Starboard owns 2.76 million shares of the company as of the end of the second quarter.

Head to the next page to take a look at three noteworthy selling transactions that have been reported recently.

Sterling Bancorp (NYSE:STL) registered one of the largest selling transactions yesterday, with director James F. Deutsch disclosing the sale of a total of 200,000 shares. The securities were sold in two deals at around $17.19 per share. However, the shares were held indirectly by Mr. Deutsch and the sales were executed by Patriot Financial Partners, L.P, which sold 170,540 shares of Sterling Bancorp (NYSE:STL), while the other 29,460 shares were sold by Patriot Financial Partners Parallel, L.P.. Following the transactions, Patriot Financial Partners holds around 1.92 million shares of Sterling Bancorp and Patriot Financial Partners Parallel owns some 331,300 shares. Mr. Deutsch, who owns 500 shares of Sterling Bancorp directly, is also a managing partner at Patriot Financial Partners. The number of investors in our database that held shares of Sterling Bancorp (NYSE:STL) slid by three during the second quarter to nine, with them having amassed 5.30% of the company’s stock at the end of June.

Executive Vice President and Vice Chairman of Johnson Controls Inc (NYSE:JCI), Bruce R. McDonald, sold 98,166 shares of the company he owned directly at $44.95 per share on Tuesday. Following the transaction, Mr. McDonald doesn’t hold any shares, but owns Phantom Stock Units, particularly 78,990 units (economic equivalent of one common share) under the long-term incentive plan that will be settled 100% in cash upon his retirement, and 72,044 units under the restricted stock plan. In addition, Mr. McDonald has an indirect ownership stake of 17.95 million shares of Johnson Controls held by a 401(k) plan trustee. Johnson Controls Inc (NYSE:JCI)’s shares have advanced by 12% since the beginning of the year and currently have a dividend yield of 2.63%. The company’s popularity among the investors we track went up during the second quarter as 32 funds reported holding long positions as of the end of June, compared to 27 funds a quarter earlier.

On Friday, Monday and Tuesday, Ralph L. Schlosstein, CEO and President of Evercore Partners Inc. (NYSE:EVR), executed three selling transactions, which included a total of 70,000 class A shares. The average sale price of the three transactions was $51.29 per share. Following the deals, Mr. Schlosstein owns directly 410,140 shares of Evercore Partners Inc. (NYSE:EVR). According to the Form 4 filing, the shares that were sold “were previously pledged to secure a loan” and the proceeds from the sale were used to pay down the loan. Another 197,061 class A shares secure the remaining balance of the loan. Mr. Schlosstein also continues to own around 1.39 million partnership units in Evercore LP, including 463,822 units held in a trust for the benefit of the CEO’s family. Since the beginning of the year, the shares of the independent investment banking advisory firm have inched down by 5.75% and currently have a dividend yield of 2.43%. Among the investors we track, 19 funds held shares of Evercore Partners Inc. (NYSE:EVR) at the end of June, down from 21 funds three months earlier.

Disclosure: None