Many analysts believe the stock market is about to go lower. They cite the recent bubble characteristics that are occurring in different areas of the market as proof. These include the GameStop (GME) frenzy, the parabolic rally in penny stocks and the cryptocurrency craze. All stock market peaks have common characteristics, and one of them is increased amounts of insider trading and selling.
Insiders are usually the people who are in the top positions at a company. They include corporate officers, members of the board of directors and anyone else who may have access to confidential information.
In order to prevent market manipulation, when there is insider trading, or insiders are buying or selling their company’s stock, they must publicly disclose it.
This information can be used to help make investment decisions.
For example, after the recent runup in many stocks, there has been significant insider selling. This means the insiders probably believe that the stock is overvalued at current levels. And history shows the insiders have been right.
Insiders have been selling shares of the following seven companies:
- Organogenesis Holdings (NASDAQ:ORGO)
- Resolute Forest Products (NYSE:RFP)
- Enova International (NYSE:ENVA)
- East West Bancorp (NASDAQ:EWBC)
- Amkor Technology (NASDAQ:AMKR)
- Pixelworks (NASDAQ:PXLW)
- OneWater Marine (NASDAQ:ONEW)
Insider Trading Sell Signals: Organogenesis Holdings (ORGO)
Organogenesis Holdings is a regenerative medicine company. It develops and sells products for advanced wound care. It also sells surgical and sports medicine products. The company was founded in 1985 and is based in Canton, Massachusetts.
As you can see on the above chart, the day traders ripped ORGO higher. At the beginning of November shares were trading around $4 per share. They have more than tripled since and are trading around $14.
Gary Gillheeney is the president and CEO of Organogenesis. He must love the stock at current prices because he just made some large sales.
On Feb. 11, he sold 69,127 at $13.82 a share. On Feb. 12, he sold 111,329 shares at $13.20 and on Feb. 16 he sold 111,406 at an average price of $13.12.
This was most of Gillheeney’s position. According to the records it leaves him holding about 195,000 shares.
Resolute Forest Products (RFP)
Resolute Forest Products is in the forest products industry. It makes paper. Products include market pulp, tissue, wood products, newsprint and specialty papers.
In today’s era of big tech, big data, electric vehicles and cryptocurrencies, a paper company may seem boring. But what isn’t boring is RFP’s returns. They have been stellar.
As you can see on the above chart, last March sellers panicked because of the novel coronavirus pandemic. Shares traded as low as $1.10 per share. But since then the price has increased by almost 1,000%. RFP was recently trading around $10.50.
Richard Joseph Tremblay is a senior vice president of operations at Resolute. He must think that RFP stock has seen a high – at least in the short-term. On Feb. 12 Tremblay sold 31,093 shares at an average price of $10.18.
Enova International (ENVA)
Enova International is a technology and analytics company. The company provides online financial services, short-term consumer loans and credit-related services. The company was founded in 2011. Its headquarters are in Chicago.
As you can see on the above chart, last May shares traded down to the $10 level. Since then they have trended steadily higher and are now trading around $29.
James Gray is a director at Enova. He decided to make a large sale of ENVA. On Feb. 11, Gray reported selling 33,000 shares at an average price of $28.80.
Wall Street doesn’t agree with this decision. Three investment banks follow the company and produce research on it. Despite the recent price appreciation, they all believe it could continue to move higher. The consensus is a “strong buy.” The average target price is $34. This is 18% above where shares are currently trading.
Insider Trading Sell Signals: East West Bancorp (EWBC)
East West Bancorp is a the bank holding company. It provides services to businesses and individuals in the United States and Greater China. It has about 125 locations in California, Georgia, Massachusetts, Nevada, New York, Texas and Washington. It also has branches in Asia.
As you can see on the chart, shares of East West almost doubled since October. They climbed from $35.50 to current levels around $70.
This company is well-followed on Wall Street. Six firms cover and provide research on it. The consensus among them is that the shares are close to being fairly valued. The average target price is $71.25. This is in line with where it’s currently trading.
Rudolph Estrada is a director of East West. He must believe that the shares are close to a top as well. On Feb. 11, he reported selling 1,364 shares at $66.06 per share.
Amkor Technology (AMKR)
Amkor Technology is an outsourced semiconductor packaging and test services company. It operates in the United States and internationally. It was founded in 1968 with headquarters in Tempe, Arizona.
As you can see on the above chart, since last March AMKR shareholders have had a lot to be happy about. Between March and the end of 2020, the share price doubled from $7.50 to $15. Then the day traders got a hold of it, and it soared to current levels around $25.
When stocks make moves like AMKR has, the vast majority of the time they reverse and give back their gains. That could happen here.
Winston Churchill is a director of Amkor. He must think that there is a good chance this happens because he just made a significant sale. On Feb. 12, Churchill reported selling 8,207 shares at an average price of $24.21.
Pixelworks develops and sells video display processor products. The company was founded in 1997 and is based in San Jose, California.
In November, shares of PXLW were trading around $2. You can see this on the chart above. Then they steadily trended higher and reached $3.50 by early February.
Then the day traders took hold of it, and shares went almost vertical on the chart. Within a matter of days they went from $3.50 to $4.50.
The two firms that follow Pixelworks think it is still undervalued. They each have it rated as a “buy” with an average target price of $5.50. That’s about 20% higher than current levels.
Despite this, President and CEO Todd Debonis took advantage of the move. On Feb. 10 he reported selling 153,863 shares of PXLW at an average price of $3.71 a share.
OneWater Marine (ONEW)
OneWater Marine(ONEW) sells boats. It also offers related marine products, such as parts and accessories. It has 61 stores in 10 states. OneWater was founded in 2014. The headquarters are in Buford, Georgia.
Last March, OneWater shareholders gave up on the company. They sold shares all the way down to the $4 level.
But as you can see on the chart, these sellers were wrong. Those who bought or held onto the stock have been richly rewarded. Shares have rallied all the way to the $36 level. This is a gain of more than 800%. and OneWater was worth about $540 million.
John Troiano is a director of the company. He decided to take advantage of the rally. Between Feb. 8 and Feb. 11, Troiano sold about 47,000 shares between $35.52 and $36.41.
At the time of this publication, Mark Putrino did not have any positions (either directly or indirectly) in any of the aforementioned securities.