When insiders deviate from their normal patter of trading it can be an interesting signal regarding the company’s stock. EZ-Insider makes it easy to spot when insiders change behavior with our proprietary Sentiment Reversal tool. Recently, two high-profile insiders deviated from longstanding trading patterns:
On January 27 and January 28, Netflix Inc. (NFLX) Chairman, Co-CEO, and Co-Founder Reed Hastings purchased a total of 51,440 shares. As shown on the graph below, the $20 million purchase is his first at the online movie subscription company, marginally boosting his holdings. In November 2021, shares of NFLX reached an all-time high of $700.99; however, shares have since slid, due in part to a report of slowing subscriber growth released on January 20. Hastings decided to buy at a price 44.5% below the high.
For nearly two decades, Hastings has sold often at NFLX, making his recent decision to purchase shares an interesting change in sentiment. He trades almost exclusively under pre-arranged 10b5-1 trading plans, making this acquisition both his first buy overall and a rare non-planned trade. Given his sentiment reversal, the position of the stock, and the relative size of this buy, investors might interpret Hastings' trade as optimism for the stock's recovery and may want to acquire shares at a discount.
Shares of Chesapeake Utilities Corp. (CPK) have been rebounding from a low in 2020, and hit an all-time high of $146.30 on January 3. Shares have since given back some of their gains. On January 14, Director Thomas P. Hill, Jr. sold 988 shares of the natural gas distributor at a price 7.7% below that high. As shown on the graph below, the $133K sale is Hill's first at the company, and reduced his holdings by 2.8%.
Hill has done well timing his trades at CPK (see chart below), adding interest to his decision to sell for the first time. His ten buys earned an average annual return of 24.9%, garnering him the highest Insider Rating for the time period. His interesting decision to switch from buying to selling could signal a profit-taking opportunity for investors while shares remain near their all-time high. Additionally, investors should keep a close eye for insider selling at the company, given the long-term headwinds facing petroleum-focused utilities.
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