This CEO Just Sold Almost $1 Million Worth Of Stock: Is It Significant?

Many investors follow insider transaction news because buying or selling company shares often signals the future direction of a stock. After all, who knows more about a company’s prospects than a high-level executive of that firm? 

But not all insider transactions are significant, and most of the time insider buys carry more weight than insider sales.

Why are insider buys more significant than sells? Because insiders usually only buy stock if they feel strongly that the share price will appreciate. But an insider may sell shares for any number of reasons that have nothing to do with the company’s prospects. Like everyone else, company insiders buy new homes, put children through college, pay for weddings and other things that require large sums of money.

Recently, a high-level company insider at a real estate investment trust (REIT) sold a large number of shares worth almost $1 million. But is this significant in terms of the future performance of the stock? Take a look:

Regency Centers Corp. REG is a Jacksonville, Florida-based retail REIT that owns and operates 404 properties in higher-income areas, mostly on the East Coast of the U.S. Its portfolio includes grocery stores, restaurants, service providers, medical spaces and higher-class retailers.

On Feb. 14, President and CEO Lisa Palmer sold 15,180 shares of Regency Centers stock at an approximate price of $65.58 per share for a total of $995,504.40. As required, the sale was disclosed to the Securities and Exchange Commission and made public.

Does this sale portend hard times ahead for Regency Centers? Is the CEO bailing out because her company is faltering? It’s doubtful. Consider the following:

• The CEO sold her shares after the fourth-quarter operating results were released on Feb. 9. If Regency Centers was in trouble, it’s more likely the sale would have occurred well before the earnings release.
• The Feb. 10 fourth-quarter earnings report was positive, as the funds from operations (FFO) of $1.05 beat analysts’ estimates of $0.98 by $0.07 and was $0.04 above its $1.01 FFO in the fourth quarter of 2021. Revenue of $307.62 million beat analysts’ estimates by $12.83 million and was 6% higher than $290.01 million in the fourth quarter of 2021.
• In its fourth-quarter report, Regency Centers noted that same property already leased of 95.1% and same property newly commenced of 92.6% were significantly above the year-over-year numbers.

As CEO Palmer stated:

“Our leasing and value creation pipelines are supported by continued robust tenant demand, providing us great momentum into 2023, while our balance sheet strength allows us to remain opportunistic.”

• On Dec. 12, J.P. Morgan analyst Michael Mueller upgraded Regency Centers from Neutral to Overweight and raised his price target from $70 to $72. Mueller said he had an improved view of strip center REITs and that Regency’s leasing has been “broad-based and robust.” Other analysts have recently raised target prices for Regency Centers as well.
• Five hedge funds have recently increased their positions in shares of Regency Centers.

• On Nov. 3, Regency Centers announced an increase in the quarterly dividend, from $0.63 to $0.65 per share. This works out to a 4% annual increase and the forward annual dividend of $2.60 per share now yields 4% on Regency Centers’ recent closing price of $64.33. Raising the dividend is usually a positive signal about the future earnings of a company.
• Regency Centers announced its next quarterly dividend will continue to be $0.65 per share, payable on April 5 to shareholders as of March 15, with an ex-dividend date of March 14.
• The technical picture of Regency Center’s chart continues to look positive. The stock has risen from a low near $52 in mid-October to a recent high above $68. The 50-day moving average crossed above the 200-day moving average (golden cross) near the end of December and has remained well above it since then. Recent up days have been on greater volume than down days.

Palmer still owns 106,000 shares of stock worth approximately $6.95 million, and while it’s always prudent to monitor a stock’s future news, investors may be able to rest easy in this instance about the CEO’s large insider sale. 

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