Top insider trades (Wed, Apr 1)

Connor’s Commentary

There were 118 new insider trades filed.

We also look at insider trade performance by market cap in the commentary section.

No insider trades were flagged as High Signal, but I shared notes on the Satellogic (SATL) and i-80 Gold Corp. (IAUX) purchases. CEO Watcher Premium subs can see those in the Trade Notes section of this email or the CEO Watcher Premium Dashboard that is linked in the Data Dump section.

As a reminder, if you upgrade to CEO Watcher Premium (link) and find that it isn’t for you, I’ll give you a refund.

• 10% Owner (DART KENNETH BRYAN) at Flutter Entertainment plc $FLUT purchased $30.01M (first purchase of FLUT). Dip Buy: the stock was down -53% in the previous 3 months. This insider has purchased the stock 14 times in the last 30 days.

• Director (RA CAPITAL MANAGEMENT, L.P.) at Mineralys Therapeutics, Inc. $MLYS purchased $8.76M (57th largest purchase, out of 119). Dip Buy: the stock was down -32% in the previous 3 months.

• Director (Frias Luis) at PagSeguro Digital Ltd. $PAGS purchased $4.97M (first-ever purchase).

• Director (GEORGE W WHITNEY) at SPROTT FOCUS TRUST INC. $FUND purchased $1.21M (first purchase of FUND).

• Chief Executive Officer at Zenas BioPharma, Inc. $ZBIO purchased $1.02M (3rd largest purchase, out of 13). Dip Buy: the stock was down -28% in the previous month. 1 other insider also purchased the stock in the last 30 days.

• President and CEO at Immunome Inc. $IMNM purchased $500.60K (5th largest purchase, out of 7). Rip Buy: the stock was up 74% in the previous 6 months. 1 other insider also purchased the stock in the last 30 days.

• President & CEO at CITIZENS, INC. $CIA purchased $235.00K (2nd largest purchase, out of 13). This increased their listed holdings by 10%. This insider has purchased the stock 2 times in the last 30 days.

• Chief Financial Officer at Satellogic Inc. $SATL purchased $197.09K (first-ever purchase). This increased their listed holdings by 18%. Rip Buy: the stock was up 92% in the previous month. Reversal: they made 3 straight sales before this purchase.

• Chief Executive Officer at Epsilon Energy Ltd. $EPSN purchased $124.18K (7th largest purchase, out of 12). Rip Buy: the stock was up 26% in the previous month.

• Director (Snabe Jim H.) at C3.ai, Inc. $AI purchased $77.30K (first purchase of AI). Dip Buy: the stock was down -43% in the previous 3 months. This insider has purchased the stock 2 times in the last 30 days.

• Director (Fairmount Funds Management LLC) at Cogent Biosciences, Inc. $COGT sold $242.62M (largest sale ever, out of 3). This decreased their listed holdings by -55%. Rip Sell: the stock was up 158% in the previous 6 months.

• Chairman and CEO at CONOCOPHILLIPS $COP sold $15.03M (6th largest sale, out of 10). This decreased their listed holdings by -23%. Rip Sell: the stock was up 20% in the previous month. 6 other insiders also sold the stock in the last 30 days.

• Director (BORGES FRANCISCO L) at ASSURED GUARANTY LTD $AGO sold $9.93M (first-ever sale). This decreased their listed holdings by -41%. Reversal: they made 6 straight purchases before this sale. 2 other insiders also sold the stock in the last 30 days.

• SR VICE PRESIDENT, CFO at Archrock, Inc. $AROC sold $5.95M (largest sale ever, out of 6). This decreased their listed holdings by -25%. Rip Sell: the stock was up 37% in the previous 3 months. Reversal: they made 8 straight purchases before this sale. 1 other insider also sold the stock in the last 30 days.

• Director (Lawrence Bryan H.) at Ramaco Resources, Inc. $METC sold $2.75M (17th largest sale, out of 40). Dip Sell: the stock was down -53% in the previous 6 months. 4 other insiders also sold the stock in the last 30 days. Appears to be regularly scheduled weekly transaction.

• EVP and Chief Legal Officer at UNIVERSAL TECHNICAL INSTITUTE INC $UTI sold $888.12K (2nd largest sale, out of 2). This decreased their listed holdings by -22%. Rip Sell: the stock was up 40% in the previous 3 months. 5 other insiders also sold the stock in the last 30 days.

• EVP General Counsel at NEXSTAR MEDIA GROUP, INC. $NXST sold $668.31K (2nd largest sale, out of 3). This decreased their listed holdings by -100%. Their last sale was 580 days ago. 12 other insiders also sold the stock in the last 30 days.

• EVP, PEM Segment Head at WESTLAKE CORP $WLK sold $461.00K (11th largest sale, out of 24). This decreased their listed holdings by -10%. Rip Sell: the stock was up 53% in the previous 3 months. Their last sale was 686 days ago. 1 other insider also sold the stock in the last 30 days.

• EVP, Government Relations at NEXSTAR MEDIA GROUP, INC. $NXST sold $399.20K (first-ever sale). This decreased their listed holdings by -100%. 12 other insiders also sold the stock in the last 30 days.

• SVP & General Counsel at RANGE RESOURCES CORP $RRC sold $396.00K (first-ever sale). Rip Sell: the stock was up 20% in the previous month. 5 other insiders also sold the stock in the last 30 days.

• Director (Szabo Shandell) at Magnolia Oil & Gas Corp $MGY sold $375.17K (first-ever sale). This decreased their listed holdings by -45%. Rip Sell: the stock was up 48% in the previous 3 months. Reversal: they made 1 straight purchases before this sale. 6 other insiders also sold the stock in the last 30 days.

• and more…

Commentary

Small caps outperform

A pretty consistent finding in stock market research is that small-cap stocks outperform large-cap stocks, and the same holds for insider trades. 

The smallest decile of companies (<$150M market cap) averages over 30% 1y returns after insider purchases, while the largest decile (>$10B market cap) is under 15%.

The same is true for insider sales, where insider selling at smaller companies precedes worse forward returns for those companies.

For sales, the smallest decile companies have a market cap below $400M, while the largest companies have a market cap above $30B.

You’ll notice the market caps in these deciles are much larger than they were for purchases. This is because a larger percentage of insider selling occurs at large companies than insider purchases.

When we bucket the companies into micro-cap (<$300M), small-cap ($300M - $2B), mid-cap ($2B - $10B), and large-cap (>$10B), we find that only insider purchases at small and micro-cap companies consistently outperform the S&P.

In insider sales, all company sizes underperform the S&P, but only micro-cap companies have negative returns across any time frame.

Medians and Win Rates

It’s clear that insider trading performance declines as company size increases. 

However, for insider purchases, median returns and win rates actually increase with company size. The performance is driven by positive outliers in small and micro-cap stocks.

While insider purchases at micro-caps have 1y mean returns of 24.8% (v 11.9% for large caps), the win rate (ie, the percent of trades with positive 1y returns) and median returns are both lower than those of large caps.

The win rate for micro-caps is 54% (v 64% for large caps), and the median return is 8.2% (v 10.4% for large caps).

This does not hold true for insider sales, where insider selling at micro-caps outperforms insider selling at larger companies across all metrics.

Overall

The size effect is alive and well in insider trading land. 

Insider trading at smaller companies outperforms that at larger companies, but the outperformance comes with greater volatility and lower win rates.

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