Small scale insider selling is not usually a problem. As Peter Lynch pointed out in his book, One Up On Wall Street, insiders sell for various reasons, which is usually not very informative, unless they are dumping shares like there is no tomorrow. It often shows that they are not sufficiently confident about the future return of their company. Insiders, especially executives and directors of companies, tend to know their company very well. Tracking their large-amount stock selling activities is a very good point to start for lucrative returns.
This article analyzes insider selling activities when they dump at least $1,000,000 worth of shares and 1% of the market cap during the past week, filed at the Securities and Exchange Commission. I have written a short analysis of each company. However, these are not buying and selling recommendations. Of course, insiders could be wrong. It is nevertheless a good starting point to add those stocks to watch list.
Delphi Automotive (DLPH) is a consumer goods company, specifically in the industry of auto parts. It has a market cap of $9.44 billion. Its stock closed at $28.75 per share last Friday. Over the past week, Delphi Automotive has one insider who sold a total of 4,000,000 shares at the total value of $114,000,000. The shares sold account for 1.21% of the company's market cap. Its stock price is about 12.83% below its 52-week high, usually a positive technical indicator on the company. Based on its PEG ratio of 0.45, the stock appears undervalued. Thinning trading volume suggests that trading interest in the company is waning. Since all the sales were done by one 10% owner (Paulson & Co.), instead of executives, it is not enough the raise the red flag on this company.
Fleetcor Technologies Inc (FLT) is a services company, specifically in the industry of business services. It has a market cap of $3050.00 million. Its stock closed at $36.67 per share last Friday. Over the past week, Fleetcor Technologies has 2 insiders who sold a total of 4,010,600 shares at the total value of $148,201,316. Multiple insider sales occasions are usually a negative sign. The shares sold account for 4.86% of the company's market cap. Given that its price is only 11.21% lower than its 52-week high, the overall market sentiment appears positive. The sub-one PEG ratio suggests it's somewhat undervalued. I like Fleetcor Technologies' operating margin of 43.74%, a good sign for the company's financial health. The recent trading volume is below average. The recent run for the company may have come to an end.
Carrols Restaurant Group Inc. (TAST) is a services company, specifically in the industry of restaurants. It has a market cap of $129.70 million. Its stock closed at $5.60 per share last Friday. Over the past week, Carrols Restaurant Group has one insider who sold a total of 2,474,630 shares at the total value of $12,457,287. The shares sold account for 9.60% of the company's market cap. Recently, the stock is not traded actively. The company has a decent dividend payout that provides a minimum margin of safety. The sales were again from one 10% owner (Jefferies Capital). Watch.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.