When corporate insiders sell a stock it's not necessarily a bad thing. Sometimes it relates to a personal need to cover taxes or another major expense. In these cases, the sales typically don't reflect a negative sentiment towards the company's growth prospects.
There are however instances where an insider sell is based upon a belief that a stock's upside is limited. But since the pertinent SEC form 4 doesn't have a line that requires an insider state their trade purpose, investors are left to speculate as to the reason.
It can be equally important to note when an insider is selling. Is it after the stock has had a nice run or after it had a steep decline? This can offer clues as to whether a stock is running out of steam or has recovery potential.
Regardless of the motivation behind insider selling, it's important to keep track of this activity when evaluating a stock.
Let's take a look at a few mid-cap stocks that have been the subject of some intriguing insider selling.
Where is Resistance for Hawaiian Electric Stock?
Last month Hawaiian Electric (NYSE:HE) Chief Financial Officer (CFO) Gregory Hazelton parted with 3,400 shares of the tropical utility company's stock. The trades were executed across four lots at prices that ranged from $44.80 to $44.82 for a total value of $152,321.
It's always a little extra intriguing when a CFO buys or sells because he or she has intimate knowledge of the company's financial position. In this case Mr. Hazelton's trades were a rather small part of his overall position. He sold roughly 9% of his stake and still owns more than 35,000 shares.
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Yet the timing was noteworthy because Hawaiian Electric appeared heading back to its pre-pandemic level around $50. Twice the stock had rallied to $45 this year only to pull back.
It was also curious that the sale came days before Hawaiian Electric's ex-dividend date. So, the CFO missed out on some of the $0.34 quarterly dividend that was paid last week.
But after Hawaiian Electric failed to cross the $45 mark for the third time last week, perhaps he was wise to trim at the top of the wave.
Has Boise Cascade Stock Peaked?
As a maker of engineered wood products, Boise Cascade (NYSE:BCC) has heavy exposure to lumber prices. To say the least, the recent surge in lumber prices has provided a major boost to the company's selling prices, financial results, and share price.
But with lumber prices retreating below $1,000 this week for the first time since March, has the top of the mountain been reached?
On May 10th, Boise Cascade stock climbed as high as $78.35, an all-time record. Less than halfway through the year, the stock rode the lumber rally to a 64% year-to-date gain.
This prompted a stretch of insider selling that began on, you guessed it, May 10th. On this day, CFO Wayne Rancourt sold 27,900 shares at an average price of $75.75. He gifted another 6,494 shares to bring his share count down by nearly 40%.
This was followed by sells from four separate insiders who apparently took Mr. Rancourt's cue. Those sells took place from May 10-13. The most recent was a $639,607 divesture by board member Steven Cooper who opted to shed more than 60% of his shares. By then the stock had fallen below $70.
Boise Cascade has trended lower in recent weeks and is now trading around $60. Investors who are wondering if the glory days for lumber-related companies is over, may want to note what insiders "saw" last month.
Who is Selling Clean Energy Fuels Stock?
Alternative fuel provider Clean Energy Fuels (NASDAQ:CLNE) has been one of the biggest penny stock success stories of the year. The natural gas specialist naturally rode the green energy wave higher as the Biden administration took control of the White House. But after reaching $20 in February, the stock quickly fell out of favor with the market slipping below $8 last month.
In the case of Clean Energy Fuels bulls, this would be a case where you'd hope insiders would swoop in and buy cheaper shares to restore investor confidence. Unfortunately, that hasn't been the case.
Instead, the company's largest shareholder Total Marketing Services has been a major seller taking every rally as an opportunity to trim its holdings. The French energy company has sold more than $60 million worth of Clean Energy Fuels stock over the past month.
Clean Energy Fuels stock has also become one of the stocks embraced by social media investors. In recent days, the so-called meme stock has seen immense trading volume and volatility. But with Total Marketing Services continuing to sell whenever the euphoria kicks in, the insider selling has kept downward pressure on the stock.
It'll be very interesting to see how this unusual battle of institutional stakeholder versus retail investor army unfolds.
Companies in This Article:
|Company||Current Price||Price Change||Dividend Yield||P/E Ratio||Consensus Rating||Consensus Price Target|
|Boise Cascade (BCC)||$52.04||+5.7%||0.77%||6.60||Hold||$56.20|
|Hawaiian Electric Industries (HE)||$43.83||+0.1%||3.10%||20.97||Hold||$37.75|
|Clean Energy Fuels (CLNE)||$7.37||+0.4%||N/A||-81.89||Hold||$15.17|