Insiders are bearish on three big name stocks: Apple Inc. (NASDAQ:AAPL), Wal-Mart Stores Inc (NYSE:WMT) and Verizon Communications Inc. (NYSE:VZ) according to informative sell transactions tracked by TipRanks. Why listen to insiders at all? Corporate insiders have access to valuable company information that isn’t always available or obvious to the public. Not only that: they also have a deep understanding of the sector or industry and the pressure of risking their own money on a stock’s future. If multiple insiders are selling a stock it can be a warning sign that investors think prices are about to drop.
What’s more, TipRanks differentiates between informative and uninformative transactions. Uninformative transactions indicate that an insider is buying/selling shares for reasons that do not necessarily indicate confidence in the company. For example, an uninformative buy in insider trading can be an insider who is given shares as a form of compensation. In contrast informative transactions are deliberately made by insiders and can be seen as a vote of confidence/ no confidence in the company.
Here we looked at three very interesting informative sell transactions that have all taken place within the last week. Let’s take a closer look now:
While analysts, bloggers and hedge funds all have strong buy signals for AAPL stock, insiders have a strong sell signal. On Feb 24, AAPL director and former Vice President of the US, Al Gore, sold AAPL shares worth $29.4 million. Al Gore, who has been on the Apple board since 2003, retained 230,137 AAPL shares worth $31 million. In fact, this is only one of a series of informative sell transactions- in the last 3 months, insiders have sold a net total of shares worth $42.3 million.
Is now a good time to sell? Share prices are currently at record highs of $136 up from $90 in May 2016 and the average analyst 12-month price target of $142.31 is only 3.9% above the current share price. However, analysts such as BMO Capital’s Tim Long believe that prices still have room to grow. He raised his price target from $142 to $160 on Feb 23 on the anticipation of higher-priced iPhone models to be released in September pushing APPL’s ASP (average selling price) of $695 even higher.
Wal-Mart Stores Inc
Walmart stores have a particularly negative insider sentiment. In fact, on Feb 24, owner Alice Walton and director/ owners Jim Walton and Robson Walton each made informative sales worth a whopping $314 million. This brings the total sale of WMT insider shares in the last 3 months to $942.3 million. Each of Alice, Jim and Robson Walton- the children of Walmart founders Sam and Helen Walton- have Walmart shareholdings worth approximately $11 billion.
Walmart has taken a beating recently after hedge fund guru Warren Buffett slashed his Walmart position by 90% to just $96 million. The market is keen to see how Walmart’s investment in the e-commerce space will pay off- especially when it faces hot competition from giant e-commerce retailer Amazon. In the holiday season, Wal-Mart recorded an impressive 29% rise in e-commerce sales as a result of its acquisition of Jet.com. Now the retailer has just announced the launch of 2 new mobile app features designed to help cut queue waiting times and the paper trial for pharmaceutical and money transfer services.
Verizon Communications Inc.
On Feb 27, EVP and Chief Info & Tech Architect, Roger Gurnani, made an informative sale of Verizon shares worth $543,000- his first informative sale of VZ shares from his $2 million holding.
Wireless telecommunication company Verizon has a moderate buy analyst consensus rating on TipRanks with 4 buy and 11 hold ratings published in the last 3 months. The average analyst price target of $52.78 predicts an upside of 5.7% from the current share price.
Goldman Sachs’ Brett Feldman reiterated his hold rating on the competitive landscape faced by Verizon. To stay competitive in the wireless communications space, Verizon introduced an unlimited data, calls and texting wireless plan for $80 per month earlier this month. This is Verizon’s first unlimited data plan for new customers since 2011. As a result, Feldman is forecasting modest EPS and revenue declines for the year.