Top insider trades (Tue, Dec 16)

Connor’s Commentary

There were 201 insider trades filed:

• Jeff Smith from Starboard bought $110M of Kenvue (KVUE) for the first time since joining the board in March

• A couple of directors bought Vera Bradley (VRA) for the first time since the summer when it was also below $2

• A second director bought Middleby Corp (MIDD) this month

• The CFO at Amcor (AMCR) bought $1M of the stock (first-ever purchase)

• An EVP at AAON (AAON) bought $484k of the stock. They had sold the stock 7 times in a row before this purchase.

• The CEO at Ryan Specialty Holdings (RYAN) sold $6.95M as part of his divorce settlement

• An EVP at Hewlett Packard (HPE) sold $3.11M of the stock (largest sale ever, out of 9)

• The Vice Chairman at G-III Apparel (GIII) sold $2.88M

• The COO at Ovintiv (OVV) sold $2M. His only other sale was a week ago

• and much more…

I go into more depth on these companies in the CEO Watcher Premium sections below.

Commentary

I sold a couple of stocks out of the CEO Watcher Portfolio after the stock prices broke below the 50d SMA. Premium subs can see those two stocks in the Data Dump section.

One of the more surprising findings about insider purchases is that larger insider buys (measured by the dollar value of the purchase) do not correlate with better performance.

According to our CEO Watcher database (back to 2009), the best returns are for purchases of under $100k, and once you cross the $1M value, returns are actually lower than the average insider purchase return.

The obvious follow-up question is whether this is related to market cap. Most insider trading research finds that the best returns are in small-cap stocks, so maybe the reason that lower transaction values have better returns is that those occur in lower market-cap stocks.

For companies with a market cap under $2b, we find that the chart looks quite similar to the overall chart, with the transactions that are under $1M performing significantly better over the next year than the transactions that are over $1M.

However, for large caps, we find that transaction size has much less impact. There isn’t a significant difference in performance between transaction sizes.

There is actually very little (if any) academic research that examines insider purchases by raw dollar value because there are a couple of better ways to measure transaction size.

One is to look at the size of the purchase relative to the company's market cap, and another is to look at the size of the purchase relative to the insider’s current holdings (which are listed in the Form 4).

We’ll look at that data tomorrow.

keep scrolling. top trades + all of the charts and data below

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