HEICO Corporation is an aerospace and electronics company that is focused on niche markets. The company specialises in the manufacturing of high-reliability parts and components for aircraft, spacecraft, defence equipment, medical equipment, and telecommunications systems. It is listed on the New York Stock Exchange and currently has a market capitalisation of $11.9 billion.
In a trading update in April, HEICO advised that its defence, space, medical, and high-end electronics operations – which make up around half of all sales – had not been impacted by Covid-19. It said that in these areas, business remains “materially consistent” with pre-crisis expectations. However, as a result of uncertainty associated with the commercial aviation side of its business, the company withdrew its fiscal year 2020 guidance, stating that it was impossible to predict with precision its sales and income for the balance of this fiscal year.
Source: 2iQ Research
What stands out to us about HEICO is the fact that since mid-June, three top-level insiders have offloaded a large amount of stock. Those who have sold stock include:
• Chairman of the Board and CEO Laurans A. Mendelson, who has held both roles since 1990. • Co-President Eric A. Mendelson, who has been a team member of the company since 1990. • Co-President Victor H. Mendelson, who has been associated with the company since 1990, serving in various capacities.
Combined, these top-tier insiders have sold over $27 million worth of HEICO stock in the space of just a few weeks. Given that these insiders are likely to have an excellent understanding of the company’s near-term prospects, we view this selling activity as a bearish signal.