Insider Trading Report: Hormel Foods Corp (HRL)

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  • Steven Lykken, a Senior Vice President at Hormel Foods Corp (HRL), recently bought 6,873 shares. The buy increased his stake by over 25 percent, and came to a total cost of $322,000.

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  • This is the second buy from insiders in as many months, following a small sale by a Group Vice President in November. Generally, insiders have been nearly exclusively sellers of shares over the past three years.

    Insiders currently own over 47 percent of shares, however, so the relatively large and consistent sales by insiders aren’t necessarily a mark against investing here.

    Shares of the food giant, best known for Spam, have lagged in the past year, underperforming the S&P 500 index by 12 percent. Earnings and revenue growth have been slightly down in the past year as well. However, changing food trends and a move towards more defensive market sectors bode well for an investment here.

    Action to take: Investors who buy shares at $47 can grab a dividend yield near 2.1 percent. That’s a bit low relative to the potential returns from an options trade betting on a higher share price in the coming months.

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  • The March 2021 $48 calls are just a hair out-of-the-money. Last trading for around $1.95, traders can likely see mid-to-high double-digit gains on a continued uptrend in shares in the coming weeks.