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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 19, 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. Montpelier Re Holdings Ltd (MRH): Montpelier provides insurance and reinsurance solutions worldwide. Montpelier has a market cap of $1.23 billion and is currently trading around $21.30 with a 52-week range of $15.06 to $21.78.The stock has gained 20% year to date.

According to SEC filing on July 19, 2012, Taylor Anthony (Chairman) sold a total of 56,600 shares at a total value of $1,209,933. Over the past three months, there have been a total of 18 insider transactions with 8 Sell transactions. The current stock price is fairly close to its 52-week high. Key financial metrics for Montpelier is given below:

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

2. AZZ Incorporated (AZZ): AZZ incorporated manufactures and sells electrical equipment and components for power generation, transmission and distribution, and industrial markets primarily in the United States and Canada. AZZ has a market cap of $814.02 million and is currently trading around $64.4 with a 52-week range of $36.46 to $66.95.The stock has gained 41.73% year to date.

According to SEC filing on July 19, 2012, Dingus David H (Chief Executive Officer) sold a total of 25,000 shares at a total value of $1,625,000. Over the past three months, there have been a total of 22 insider transactions with 15 Sell transactions. On June 28, 2012, AZZ raised their fiscal 2013 guidance from $475-$510 million to $550-$575 million and declared a $0.25 per share cash dividend. Key financial metrics for AZZ is given below:

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

3. Dorman Products Inc (DORM): Dorman Products, Inc. supplies automotive replacement parts, fasteners, and service line products primarily for the automotive aftermarket. Dorman Products Inc has a market cap of $935.98 million and is currently trading around $25.87 with a 52-week range of $13.28 to $26.16. The stock has gained 40.14% year to date.

According to SEC filing on July 19, 2012, Beretta Joseph M (Co-President) sold a total of 20,000 shares at a total value of $495,600 through Rule 10b5-1 trading plan. Please refer to the footnote from Form 4 for more details about this transaction. Over the past three months, there have been a total of 46 insider transactions and all of them are sell transactions. Key financial metrics for Dorman Products Inc is given below:

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

Other notable transactions (minimum of 4000 shares) insider selling transactions from small-cap companies filed at the SEC on July 19, 2012 are as follows:

  • 4. Healthcare Services Group, Inc (HCSG): Healthcare Services Group provides housekeeping, laundry, linen, facility maintenance, and dietary services to nursing homes, retirement complexes, rehabilitation centers, and hospitals in the United States. Healthcare Services Group has a market cap of $1.54 billion and is currently trading around $22.98 with a 52-week range of $12.16 to $23.55. According to SEC filing on July 19, 2012, Frome Robert L (Director) sold a total of 9,000 shares at a total value of $200,250.
  • 5. Orbitz Worldwide, Inc (OWW): Orbitz operates as an online travel company worldwide. It enables leisure and business travelers to search for and book a range of travel products and services. Orbitz has a market cap of $452.83 million and is currently trading around $4.35 with a 52-week range of $1.57 to $4.54. According to SEC filing on July 19, 2012, Fulton Samuel M (SVP, Retail) sold a total of 8,125 shares at a total value of $36,563 through Rule 10b5-1 trading plan.
  • 6. Cantel Medical Corp (CMN): Cantel Medical Corp provides infection prevention and control products and services in the healthcare market worldwide. Cantel Medical Corp has a market cap of $716.04 million and is currently trading around $26.52 with a 52-week range of $12.68 to $32.48. According to SEC filing on July 19, 2012, Sheldon Craig A (Sr. V.P., CFO and Treasurer) sold a total of 6,168 shares at a total value of $164,322.
  • 7. Sourcefire, Inc (FIRE): Sourcefire provides intelligent Cybersecurity technologies to commercial enterprises and government agencies worldwide. Sourcefire has a market cap of $1.41 billion and is currently trading around $47.69 with a 52-week range of $23.26 to $59.64. According to SEC filing on July 19, 2012, McDonough Thomas M (President and COO) sold a total of 4,000 shares at a total value of $173,365 through Rule 10b5-1 trading plan.
  • 8. Steiner Leisure Limited (STNR): Steiner Leisure Limited provides spa services and personal care products for men, women, and teenagers worldwide. Steiner Leisure has a market cap of $687.14 million and is currently trading around $44.97 with a 52-week range of $35.94 to $53.49. According to SEC filing on July 19, 2012, Steiner Leisure had two insiders combine sold a total of 4,000 shares at a total value of $180,984. Please refer to the footnote for more details about this transaction. Multiple insider selling are usually a negative sign.

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 19