In this series, I’ve been examining insider moves ahead of earnings.
Regarding what’s coming for the week of May 23, I checked in with InsiderScore to scan for interesting insider moves that occurred over the previous quarter. Additionally, I screened for company announcements, headlines and stock moves.
In an update on May 18, InsiderScore noted that sentiment moved toward Sell territory, which isn’t surprising since many companies have reported earnings.
“While a Sell bias continues across the market, there was a notably positive shift to more positive sentiment towards the end of the week as Russell 2000 insiders emerged as buyers on relative weakness,” wrote InsiderScore. “S&P 500 were more likely to sell and there was a big increase in multi-insider selling events at index companies last week.”
It’s always important to note that insiders buy and sell shares of their companies on a daily basis, but some moves pique interest more than others.
Here is what piques mine:
Five executive vice presidents sold their shares of the warehouse club to the tune of $7 million during the quarter.
They are: Dennis Zook, who sold 4,100 shares for $623,300, an average of $152.96 each; James Murphy, who sold 15,000 shares for $2.3 million, an average of $154.45 each; Franz Lazarus, who sold 20,000 shares for $3.1 million, an average of $153.44 each; Timothy Rose, who sold 1,800 shares for $268,800, an average of $151.25 each; and finally, John McKay, who sold 4,500 shares for $708,300, an average of $159.00 each.
InsiderScore noted that Costco saw a cluster selloff in October 2015, when nine insiders sold to the tune of $20.3 million. In the coming days, eyes will be on the company as it ports customers over to
Three insiders disposed of their shares over the quarter.
Mathew Watson, VP of finance, controller and chief accounting officer, sold 1,700 shares of Best Buy for $55,600, an average of $32.70 each. Joining Watson were Shari Ballard, president of U.S. retail, who exercised options and sold 185,000 shares for $6,096,900, an average of $32.99 each, and Chief Financial Officer Sharon McCollam, who exercised options and sold 511,900 Best Buy shares for $17,500,000, an average of $34.15 each.
“[The] sales cut [Ballard’s and McCollam’s] equity exposure by more than a third,” noted InsiderScore in an update. “It's certainly possible that the pair are aiming to maintain a certain dollar level of exposure to Best Buy and that the sales were transacted now because the window may be closed when performance-based shares vest. However, McCollam saw 124,100 shares vest in October but didn't sell.”
Best Buy is expected to report earnings on May 24 before the market open. Analysts most recently forecast average earnings of 35 cents. Best Buy is up over 5% for the past three months.
Tiffany & Company
Tiffany also had insiders disposing of their shares during the quarter. Director Charles Marquis exercised options and sold 10,000 shares for $727,400, an average of $72.74 each. Director Michael Joseph Kowalksi also exercised options and sold 154,800 shares for $11.3 million, an average of $72.78 each. Finally, Senior Vice President Andrew Hart sold 1,900 shares for $138,500, an average of $71.
On March 28, InsiderScore noted that the company had a low-priced buyback in the fourth quarter of 2015 when it bought back $104.1 million, or 1.1%, of its outstanding shares. At that time, Tiffany’s stock price had declined by 2.5% since the buyback, according to InsiderScore.
Tiffany is expected to report earnings on May 25 before the market open. Analysts most recently forecast average earnings of 68 cents. The company is down .90% over the past three months.
Honorable Mention: Sears Holdings
It’s safe to say that Sears is still in the throes of digging out from its distressed status, even as the death of malls is literally taking anchors like Sears away with it. In April, Sears announced the closure of 68 Kmart and 10 Sears stores. A recent update by Michael Exstein and Anjani Vedula of Credit Suisse pointed out that Sears can be found in 110 of the 184 malls they classify as least valuable property, or “LVP” malls. These malls have mortgages in four distressed categories, often because they have lost, or will be losing, major tenants. “The prime reason for this happening is the location having very low sales productivity, making it difficult for the tenant to generate a fourwalls profit," wrote Exstein and Vedula.
Even so, there is one potential glimmer worth noting. Sears isn't giving up just yet. Earlier in the month, the company unveiled a 10,000 square foot high-tech appliance-only store in Fort Collins, Colorado.
Sears is expected to report earnings on May 26 before the market open. Analysts most recently forecast an average loss of $3.20. Sears is down over 29% for the past three months.
