Voluminous Insider Selling at Apple Inc. (AAPL) and Flowserve Corp (FLS), Plus Insider Buying at WBA and Others

Plenty of research concludes that securities purchases on the part of corporate insiders beat broader market gauges by a wide margin on aggregate. It would be safe to claim that most insider purchases represent a bullish signal to the investment community. Meanwhile, investors usually tend to focus much more attention on insider buying than selling, mainly because insiders can sell shares for a wide range of reasons that might not be related to their companies’ current developments or future prospects.

Nonetheless, insider selling data still represents a valuable piece of information that can assist investors in their stock analysis process. For instance, renowned short-seller Jim Chanos of Kynikos Associates uses insider selling to support his reasoning on some occasions. Instead of blindly mimicking each insider purchase and sale in the market, smart investors should use insider trading metrics as additional tools in their security analysis process and attempt to use those metrics to build and support a larger investment thesis. That being said, let’s discuss a set of noteworthy insider transactions reported with the SEC on Friday.

At Insider Monkey, we track around 750 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details).

CEO of Well-Known Drugstore Chain Buys 2 Million Shares

The man at the helm of Walgreens Boots Alliance Inc. (NASDAQ:WBA) bought a very sizable block of shares this past week. Stefano Pessina, the Executive Vice Chairman and Chief Executive Officer of the drugstore chain snapped up 2 million shares on Friday at a price tag of $81.41 each. The shares are held by Alliance Sante Participations S.A., which is 100% owned by another corporation controlled by Mr. Pessina. The CEO’s indirect ownership stake held via Alliance Sante Participations amounts to 142.99 million shares. Mr. Pessina also holds a direct ownership stake of 96,500 shares.

In late-October 2015, the well-known drugstore chain agreed to acquire the third-largest drugstore in the United States, Rite Aid Corporation (NYSE:RAD). Although the $9.4 billion merger was originally anticipated to close in the second-half of this year, the two companies pushed the deadline to close the deal to next year, amid delays in selling stores in order to receive regulatory approval. The companies anticipate closing the deal in early-2017, as they expect to agree to sell between 500 and 1,000 stores by the end of 2016. WBA shares are 5% in the red this year. Tom Gayner’s Markel Gayner Asset Management reported owing 2.14 million shares of Walgreens Boots Alliance Inc. (NASDAQ:WBA) through the round of 13F filings for the September quarter.

The next two pages of this article will discuss more insider transactions reported with the SEC during the final trading day of the previous week.

CEO of Growing Print and Online Publisher Boosts Stake

The man in charge of New Media Investment Group Inc. (NYSE:NEWM) disclosed the purchase of a voluminous block of shares on Friday. Chief Executive Officer Michael E. Reed bought 50,000 shares on Thursday at prices between $14.17 and $14.35 per share. Following the reported purchase, Mr. Reed currently holds an aggregate of 165,769 shares.

New Media, formerly known as GateHouse Media, owns, operates and invests in high-quality local-media assets. The company’s portfolio of media assets includes 614 publications, 527 websites, 78 mobile sites, as well as six yellow page directories. The company that owns the Columbus Dispatch recently announced the purchase of the Rochester Business Journal of New York and the daily Columbia Daily Tribute of Missouri, adding two newspapers to its growing portfolio. New Media Investment Group Inc. (NYSE:NEWM), one of the largest publishers of locally-based print and online media in the United States, has seen the value of its shares drop by 12% this year. Eric Sprott’s Sprott Asset Management added a 100,000-share stake in New Media Investment Group Inc. (NYSE:NEWM) to its portfolio during the September quarter.

Executive at Financial Services Technology Provider Increases Ownership Stake

One member of Fiserv Inc. (NASDAQ:FISV)’s executive team added a block of shares to his existing holding last week. Devin McGranahan, President of the company’s Billing and Payments Group, acquired 15,000 shares on Wednesday at prices that fell between $99.05 and $99.26 per share. Following the recent purchase, Mr. McGranahan currently holds an ownership stake of 25,155 shares.

The provider of information technology to the financial and insurance industries has seen its market capitalization jump by 7% since the beginning of the year. The increased focus on digital channels such as internet, mobile and tablet banking by both financial institutions and their customers, as well as the growing volume and types of payments transactions in the marketplace, have benefited Fiserv Inc. (NASDAQ:FISV) in recent years. The company reported total revenue of $1.38 billion for the third quarter, an increase of $67 million compared to the same period of the previous year. Navellier & Associates, founded by Louis G. Navellier, was the owner of 79,635 shares of Fiserv Inc. (NASDAQ:FISV) at the end of September.

The final page of this article will discuss fresh insider selling witnessed at two other companies.

One Executive at iPhone Maker Discards Shares

Although Apple Inc. (NASDAQ:AAPL) has witnessed high volumes of insider selling in recent months, most of the insider selling was associated with freshly-exercised stock options or was conducted under pre-arranged trading plans. As Insider Monkey strives to cover only spontaneous and information-rich insider transactions, the insider selling at the iPhone maker has not been discussed for months. Nonetheless, a member of the company’s executive team discarded a rather sizable block of shares last week, a sale that was not related to stock options nor trading plans. Eduardo H. Cue, Senior Vice President of Internet Software and Services since September 2011, liquidated 335,000 shares on Wednesday at prices ranging from $111.53 to $112.31 per share. The shares were held via a trust fund that currently owns a mere 1,464 shares.

At the end of the previous week, Apple Inc. (NASDAQ:AAPL) announced plans to significantly cut the prices of its USB-C adapters following strong criticism after the company revealed the new MacBook Pro laptops with no standard ports. The new laptops use newer USB-C ports for connecting devices such as smartphones, hard drives and flat-panel displays, which forced many buyers to purchase adopters so they could use peripheral devices. The shares of the iPhone maker have gained 3% this year. Ken Fisher’s Fisher Asset Management reported ownership of 11.37 million shares of Apple Inc. (NASDAQ:AAPL) in its 13F filing for the third quarter.

CEO of Flowserve Discards Shares After Releasing Disappointing Results

The most well-informed executive at Flowserve Corp (NYSE:FLS) also offloaded a block of shares last week. President and Chief Executive Officer Mark A. Blinn sold 119,232 shares on Wednesday at prices ranging from $41.39 to $41.90 per share, cutting his ownership stake to 194,194 shares.

The insider selling comes shortly after the manufacturer and aftermarket service provider of comprehensive flow control systems released its financial results for the September quarter. The company’s sales for the quarter decreased by a disturbing 14% year-over-year to $943 million, with the decrease being more heavily weighted towards original equipment sales. As stated in one of the company’s recent statements, Flowserve Corp (NYSE:FLS)’s energy and industrial customers remained “deliberate in their investment decisions.” The shares of Flowserve are down by around 2% since the start of the year. John Zaro’s Bourgeon Capital owns 12,000 shares of Flowserve Corp (NYSE:FLS) as of September 30.

Disclosure: None