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During the past week, corporate insiders traded a number of high profile retail stocks, including Coldwater Creek Inc. (NASDAQ:CWTR) and Macy’s Inc. (NYSE:M). Many of these were regular trades in the open market, and others were automatic trades made under SEC Rule 10b5-1. It is generally believed that regular insider share purchases and sales in the open market carry more predictive value as they are made voluntarily by the insiders. Conversely, trades made under SEC Rule 10b5-1--known as “Automatic Buys” and “Automatic Sells”-- are part of a pre-determined plan or contract, and it is assumed that the plan was created before the insider had any privileged non-public information.

While insiders are prohibited from trading based on nonpublic information, most believe that such trading does occur around the edges. The thinking goes that corporate insiders, because of their access, have the most up-to-date information on the health of their companies and the industries they operate in. Investors, as a result, can benefit from the timely knowledge of insider transactions. In fact, one University of Michigan study found that when executives bought shares in their own companies, the stocks tended to outperform the total market by 8.9% over the next 12 months. Conversely, when they sold shares, the stock underperformed by 5.4%.

Furthermore, even automated trades made under 10b5-1 have some predictive value due to loopholes in the rule that, for example, allow the insider to cancel the trading plan without any penalty or legal liability. So, the insider could set up a 10b5-1 trading plan before they have inside information (for example, from a quarterly report and guidance) while retaining the option to later cancel the plan based on the inside information. So, in effect, the execution of an automated trade also carries some predictive value as insiders retain the option under the existing rules to cancel their trades without penalty or legal liability.

Insider trading as defined here (and by the SEC) includes not just corporate insiders such as company executives and key employees, but also directors and large shareholders that have access to non-public information. Large shareholders are defined by the SEC for this purpose are those that having beneficial ownership of ten percent of more of the firm’s equity securities (including institutional investors). Furthermore, like in the 13-D and 13-G filings for Institutions, the SEC Forms 3 and 4 on insider filings are extremely timely, and hence of greater significance, as they must be reported within two business days of the trade.

The following is our summary of the most recent major insider filings in the retail group during the last week:

Coldwater Creek Inc. (CWTR): CWTR is a specialty retailer of women’s apparel, accessories, jewelry, and gift items, via 412 premium retail stores and merchandise clearance outlet stores in the U.S. Insiders currently hold 34.8% of company shares, and during the last week, five insiders bought in the open market a total of 8.27 million shares for $7.4 million, or 16.76% of the total number of shares held (directly and indirectly) by insiders. This included 8.23 million shares bought by CEO Dennis Pence, and the remaining bought by President and Chief Marketing Officer Dean Brown, CFO Anthony Bell, SVP General Counsel & Secretary John Hayes, and Director Curt Hecker. During the past year, 14 CWTR insiders have bought a total 9.5 million shares or 18.7% of the total number of shares held by insiders. No insiders sold CWTR stock in the last year.

Macy’s Inc. (M): Macy’s operates 850 department stores in 45 states, D.C., Puerto Rico and Guam. Insiders currently hold 0.2% of company shares, and during the last week, two insiders exercised their options and sold in the open market the resulting 82,000 shares for $2.4 million, or 8.20% of the total number of shares held (directly and indirectly) by insiders. This included EVP Amy Hanson and Chief Administrative Officer Thomas Cole. During the past year, 33 Macy’s insiders have sold a total 1.2 million shares, or 56.3% of the total number of shares held by insiders. No insiders bought Macy’s stock in the last year.

Gamestop Corp. (NYSE:GME): GME is a retailer of video game products and personal computer (PC) entertainment software via 6,670 Gametop and EB Games video game stores. Insiders currently hold 1.5% of company shares, and during the last week, Director Jerome Davis sold 4,000 shares in the open market, or 0.05% of the total number of shares held (directly and indirectly) by insiders. During the past year, 20 GME insiders have sold a total 3.6 million shares or 29.2% of the total number of shares held by insiders; only one insider bought GME stock, buying 2,335 shares, during the last year.

Sally Beauty Holdings (NYSE:SBH): SBH operates beauty supply stores offering hair-care products, cosmetics and other beauty items worldwide. Insiders currently hold 37.5% of company shares, and during the last week, London-based Clayton Dubilier & Rice, LLC (CD&R), beneficial 10% owner, sold in the open market 20.7 million shares for $346.7 million, or 22.8% of the total number of shares held (directly and indirectly) by insiders. CD&R is a private equity firm that earlier carved-out SBH as part of the restructuring of Alberto-Culver Company, an international specialty retailer and distributor of professional beauty supplies. During the past year, 18 SBH insiders have sold a total 21.2 million shares or 23.1% of the total number of shares held by insiders. Two insiders bought SBH stock in the last year, buying a total of 13,800 shares.

Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR): GMCR operates in the specialty coffee industry in the U.S. and internationally. It distributes approximately 200 whole bean and ground coffee selections, cocoa, teas, and coffees. It is probably most famous for its patented single-cup coffee and tea brewing systems for offices and homes sold under the Keurig brand name. Insiders currently hold 11.5% of company shares, and during the last week, CEO Lawrence Blanford exercised options and sold under the 10b5-1 plan (“Automatic Sell”) the resulting 61,751 shares, or 0.38% of the total number of shares held (directly and indirectly) by insiders. During the past year, 25 GMCR insiders have sold a total 1.9 million shares or 10.3% of the total number of shares held by insiders. No insiders bought GMCR stock during the last year.

Bed Bath & Beyond (NASDAQ:BBBY): BBBY operates a chain of retail stores that sell a range of domestic merchandise and home furnishing items via 1,139 Bed Bath & Beyond, Christmas Tree Shops, Harmon and Harmon Face Values stores. Insiders currently hold 1.3% of company shares, and during the last week, Co-Chairman’s Leonard Feinstein and Warren Eisenberg sold in the open a total of 1.0 million shares, or 13.0% of the total number of shares held (directly and indirectly) by insiders. During the past year, 25 BBBY insiders have sold a total 2.7 million shares, or 28.7% of the total number of shares held by insiders. No insiders bought BBBY stock during the last year.

Costco Wholesale Corp. (NASDAQ:COST): COST operates 582 wholesale membership warehouses in the U.S., Puerto Rico, Canada, the U.K., Korea, Taiwan and Japan. Insiders currently hold 0.5% of company shares, and during the last week, five insiders sold in the open market (including one under 10b5-1 plan) a total of 62,978 shares, or 1.4% of the total number of shares held (directly and indirectly) by insiders. During the past year, 52 COST insiders have sold a total 1.0 million shares, or 18.2% of the total number of shares held by insiders. No insiders bought COST stock during the last year.

Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are our ‘opinions’ and we may be wrong. We may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to our thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.

Source: Retail Sector's Insider Buy and Sell SEC Filings From Last Week