Small Cap Trulia Inc (TRLA): Should You Buy As Insiders Sell? Z & MOVE

Small cap online real estate listings stock Trulia Inc (NYSE: TRLA) jumped 8.52% yesterday and has doubled since the start of the year, but insiders have been selling - meaning its time to take a closer look at the stock along with the performance of peers like Zillow Inc (NASDAQ: Z) and Move Inc (NASDAQ: MOVE). So what should outside investors do with Trulia Inc?

What Is Trulia Inc?

Small cap Trulia Inc gives home buyers, sellers, owners, and renters the "inside scoop" on properties, places and real estate professionals. More specifically, Trulia Inc offers 15 mobile apps across multiple platforms, including dedicated apps for renters, mortgage seekers and agents plus the company attracts more than 35 million unique house hunters every month. In addition and last August, Trulia Inc completed the acquisition of Market Leader which offers comprehensive suite of SaaS solutions, including CRM and lead management tools. So for agents, Trulia Inc offers the first ever end-to-end offering, including best-in-class marketing tools and the broadest suite of software to help agents build and manage their business.

As for potential peers or benchmarks, Zillow Inc has a home and real estate marketplace with a database of more than 110 million US homes and the largest real estate and rental advertising networks in the US that's in partnership with Yahoo! Homes! while Move Inc is an online real estate and operator of the Move Network of real estate web site for consumers and real estate professionals with more than 20 million monthly visitors.

What You Need to Know or Be Warned About Trulia Inc

Its not that clear why Trulia Inc suddenly jumped higher in afternoon trading yesterday on no apparent company specific news, but just released housing data did show that housing starts had surged to their highest in nearly six years in November. On the other hand, existing home sales lost steam in November thanks to higher interest rates and a tighter supply of homes for sale. In fact, sales dropped for the third straight month to a seasonally adjusted annual rate of 4.9 million - down 4.3% from October and down 1.2% from a year earlier.

Earlier in the week, it was reported that hedge fund Citadel Advisors LLC and its affiliates (including Citadel Advisors Holdings LP and Citadel GP LLC) had accumulated a 6.3% stake in Trulia Inc with the 2.41 million Trulia shares owned by the company and its affiliates worth about $75.3 million at Monday's closing price of $31.18 per share. In addition, there was also an 8-k filing noting that Trulia Inc had entered into a purchase agreement with J.P. Morgan Securities LLC and Deustsche Bank Securities Inc. for the sale of $200 million aggregate principal of 2.75% Convertible Senior Notes due 2020 along with an over-allotment option to purchase, (within 30 days from the date of the Purchase Agreement) up to an additional $30 million aggregate principal amount of the Notes on the same terms and conditions.

However, it was also reported that CEO Peter Flint had sold 2,400 shares at $32.64 per share on December 19 (he still owns 1,417,959 shares) plus Yahoo! Finance reveals over a dozen insider sales in this month alone.

Dec 16, 2013	FLINT PETEROfficer	8,000	Direct	Automatic Sale at $30.98 - $31.79 per share.	251,0002
Dec 16, 2013	INKINEN SAMIDirector	5,800	Direct	Automatic Sale at $30.97 - $31.76 per share.	182,0002
Dec 9, 2013	FLINT PETEROfficer	8,000	Direct	Automatic Sale at $30.59 - $31.23 per share.	247,0002
Dec 9, 2013	INKINEN SAMIDirector	5,800	Direct	Automatic Sale at $30.59 - $31.3 per share.	179,0002
Dec 2, 2013	INKINEN SAMIDirector	5,800	Direct	Automatic Sale at $31.80 - $32.61 per share.	187,0002
Dec 2, 2013	FARNEDI DANIELEOfficer	1,250	Direct	Automatic Sale at $31.74 - $32.76 per share.	40,0002
Dec 2, 2013	DARLING SCOTTOfficer	2,000	Direct	Option Exercise at $5.55 per share.	11,100
Dec 2, 2013	LEVINE PAUL M.Officer	10,000	Direct	Option Exercise at $4.29 per share.	42,900
Dec 2, 2013	DARLING SCOTTOfficer	2,000	Direct	Automatic Sale at $31.80 - $32.56 per share.	64,0002
Dec 2, 2013	FARNEDI DANIELEOfficer	1,250	Direct	Option Exercise at $0.15 per share.	187
Dec 2, 2013	LEVINE PAUL M.Officer	10,000	Direct	Automatic Sale at $31.81 - $32.62 per share.	322,0002
Dec 2, 2013	WALDORF GREGORYDirector	3,623	Direct	Automatic Sale at $31.78 - $32.62 per share.	117,0002
Dec 2, 2013	FLINT PETEROfficer	9,200	Direct	Automatic Sale at $31.80 - $32.64 per share.	296,0002

 

Why would insiders be selling? Near the end of October, Trulia Inc reported that third quarter revenue more than doubled to $40.3 million, net income of $7 million verses a loss of $1.7 million and expected 4th-quarter revenue of $48.5 to $50 million verses a previous estimate of $48.3 million. All of these figures take into account the numbers from the recent Market Leader acquisition. So it does not look like the company itself is facing any trouble beyond headwinds that are also beyond its control in the housing sector.

Share Performance: Trulia Inc vs. Z & MOVE

On Thursday, small cap Trulia Inc jumped 8.52% to $33.38 (TRLA has a 52 week trading range of $15.43 to $52.71 a share) for a market cap of $1.24 billion plus the stock is up 105.5% since the start of the year and up 44.9% for retail investors since September 2012. Here is a look at the long term performance of Trulia Inc, Zillow Inc  and Move Inc:

As you can see from the above chart, all three stocks seemed to take off this year but have been trending downward over the past few months.

Finally, here is a look at the latest technical charts for all three online real estate stocks:

The Bottom Line. I probably would not be overly concerned about insiders in Trulia Inc trying to cash out on some of their profits from this year's run up, but I would be keeping a close eye on both the housing market itself and competitors like Zillow Inc  and Move Inc for any signs of a definite slowdown that will impact the entire sector.