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There are many different strategies to trade stocks and one of them is to find the insider trading of stocks. When corporate insiders trade in their own securities, they must report their trades to the Securities and Exchange Commission (SEC), usually within a few business days of the trade. Insider trading cannot be based on material non-public information. However, many investors believe that corporate insiders may have better insight into the growth of the company and its proceedings.

In this article, I will focus on notable insider sell transactions from small-cap companies (market cap between $250 million and $2 billion) filed at the Securities and Exchange Commission on July 17, 2012. I have also included key financial metrics for the first three companies. You can use this list as a potential starting point for your analysis.

Definition of Insider: Corporate insiders are either a company's officers, directors, or any beneficial owners of more than ten percent of a class of the company's equity securities registered under Section 12 of the Securities Exchange Act of 1934.

Rule 10b5-1 Definition: A rule established by the SEC that allows insiders of publicly-traded corporations to create a trading plan of when and how to buy or sell shares in that company. Rule 10b5-1 allows major holders to buy or sell a predetermined number of shares at a predetermined time. 10b5-1 plans are used by many corporate insiders to avoid the accusations of insider trading, regardless of what nonpublic knowledge he/she may later come to possess.

1. Threshold Pharmaceuticals, Inc (THLD): Threshold Pharmaceuticals is a development stage company, focuses on the discovery and development of drugs for the microenvironment of solid tumors and the bone marrows of hematologic malignancies as novel treatments for patients living with cancer. In March 2012, Threshold Pharmaceuticals has received Orphan Drug Designation from U.S. FDA and European Commission for TH-302 drug for the treatment of Soft Tissue Sarcoma. In February 2012, Threshold signed a global agreement with Merck KGaA (NYSE:MRK) to co-develop and commercialize TH-302. Threshold Pharmaceuticals has a market cap of $419.11 million and is currently trading around $7.69 with a 52-week range of $1.18 to $9.07. The stock has gained 530.33% year to date.

According to SEC filing on July 17, 2012, Jaeger Wilfred E (Director) sold a total of 125,000 shares at a total value of $1,001,663. Please refer the footnote from Form 4 for more detail about the ownership. Over the past three months, there have been a total of only one insider transaction. Key financial metrics for Threshold Pharmaceuticals is given below:

The following chart provides the insider trading summary for a three-month and 12-month period.

2. Smith & Wesson Holding Corporation (SWHC): Smith & Wesson Holding Corporation provides products and services for safety, security, protection, and sports in the United States and internationally. Smith & Wesson has a market cap of $631.09 million and is currently trading around $9.66 with a 52-week range of $2.29 to $10.00. The stock has gained 121.56% year to date.

According to an SEC filing on July 17, 2012, Saltz Mitchell A (Director) sold a total of 110,520 shares at a total value of $1,057,950 through Rule 10b5-1 trading plan. The current stock price is fairly close to its 52-week high. On June 28, 2012, Smith & Wesson reported record fourth quarter results and issued first quarter, fiscal 2013 revenue guidance above analysts' estimates. Over the past three months, there have been a total of two insider transactions and all of them are sell transactions. Key financial metrics for Smith & Wesson is given below:

The following chart provides the insider trading summary for a three-month and 12-month period.

3. BancFirst Corporation (BANF): BancFirst Corporation operates as the holding company for BancFirst that provides commercial banking services to retail customers and small to medium-sized businesses in Oklahoma.BancFirst Corporation has a market cap of $651.73 million and is currently trading around $42.99 with a 52-week range of $29.63 to $43.71. The stock has gained 14.52% year to date.

According to SEC filing on July 17, 2012, R Banking Limited Partnership (Beneficial Owner, indirectly controlled by David E. Rainbolt) sold a total of 56,500 shares at a total value of $2,433,413. Over the past three months, there have been a total of 8 insider transactions and all of them are sell transactions. Key financial metrics for BancFirst Corporation are given below:

The following chart provides the insider trading summary for a three-month and 12-month period.

Other notable transactions (minimum of 10,000 shares) insider selling transactions from small-cap companies filed at the SEC on July 17, 2012 are as follows:

  • 4. Virtusa Corporation (VRTU): Virtusa provides information technology ((NYSE:IT)) consulting, technology implementation, and application outsourcing services in North America, Europe, the Middle East, and Asia. Virtusa has a market cap of $347.81 million and is currently trading around $13.56 with a 52-week range of $11.41 to $21.79. The stock has fallen 6.35% year to date. According to SEC filing on July 17, 2012, Canekeratne Kris A (Chairman & CEO) sold a total of 18,000 shares at a total value of $246,065 through Rule 10b5-1 trading plan.
  • 5. Duff & Phelps Corporation (DUF): Duff & Phelps Corporation, together with its subsidiaries, engages in the provision of independent financial advisory and investment banking services in North America, Europe, and Asia. Duff & Phelps has a market cap of $642.78 million and is currently trading around $15.11 with a 52-week range of $9.29 to $16.50.The stock has gained 4.21% year to date. According to SEC filing on July 17, 2012, Duff & Phelps had two insiders combine sold a total of 16,654 shares at a total value of $249,810 through Rule 10b5-1 trading plan. Multiple insider selling are usually a negative sign.
  • 6. JetBlue Airways Corporation (JBLU): JetBlue Airways Corporation provides passenger air transportation services in the United States. JetBlue Airways has a market cap of $1.63 billion and is currently trading around $5.77 with a 52-week range of $3.40 to $6.32. The stock has gained 10.96% year to date. According to SEC filing on July 17, 2012, Barger Dave (President and CEO) sold a total of 15,000 shares at a total value of $87,995 through Rule 10b5-1 trading plan.

Sources: Some of the data is sourced from Google Finance, Nasdaq, Finviz, Fidelity and SEC.gov.

Additional Disclosure: I change my positions very frequently and may initiate either long or short positions in the above mentioned stocks at any time.

Disclaimer: I am not a registered investment advisor and do not provide specific investment advice. The information contained herein 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. It is up to investors to make the correct decision after necessary research. The information and data is believed to be accurate, but no guarantees or representations are made.

Source: Notable Small-Cap Insider Sells Filed On July 17