Big-Name Investor Sells Shares and Triggers a Play Opportunity
On August 28, I introduced the idea of following along with Schedule 13D filings – which are reported to the Securities and Exchange Commission (SEC) – because they can sometimes lead to great moneymaking opportunities.
As a refresher, I wrote…
A Schedule 13D must be submitted to the SEC within 10 days by anyone who acquires beneficial ownership of more than 5% of any class of publicly traded securities in a public company. These documents give the public transparency into purchases that large shareholders make in any public company.
More importantly, they often contain hints about potential future events at the company, including hostile takeovers, company breakups or any other “change of control” situations.
I noted how Carl Icahn’s recent buying activity revealed a possible profit opportunity in a little-known digital interactions company in Southern California called Conduent.
But today, the story is reversed…
You see, recent 13D filings show that another big-name investor is now selling his shares of a different company.
And a quick look at the company’s chart gives you some telling clues as to why he might be making this move.
Here’s the story…
From July 22 to August 23, Mark Pulte disclosed the sale of more than 2.3 million shares of PulteGroup (NYSE: PHM), with prices ranging from $32.82 to $34.02. This reduced his stake to just above 14 million shares, which is about 5.3% of the outstanding shares.
Why would he sell?
As you can see in the chart, the stock price has moved above resistance at $33.50, which might indicate that it’s ready to extend higher.
Mark Pulte’s actions suggest otherwise.
Action Plan: The last time PulteGroup tested the $34.50 level was in December 2017. From there, it fell back to around $28 in May 2018 – only to extend down further to $20 by October 2018. Will this same pattern play out again?
That’s impossible to say.
But the actions of Mark Pulte give us a clue as to what the insiders feel about PulteGroup at these levels…
Hint: They’re telling you to play it lower.
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