What ePlus Insiders Are Really Saying with Their Pens

The moves by director John E. Callies tell a clear story. In late December, he sold 560 shares for about $50,417, reducing his direct holdings to 21,428 shares. Three days later, he disposed of another 280 shares through a charitable donation, further decreasing his direct ownership. This wasn't a one-off; it was a pattern of selling.

The timing is the red flag. These transactions occurred after the stock had already delivered a 16% gain over the past year. While the company's first quarter of fiscal 2026 has been strong, the director chose to take money off the table. For a board member, this kind of selling-especially after a period of solid performance-raises questions about his personal alignment with the long-term stock trajectory. It suggests a lack of skin in the game when the stock is climbing.

Institutional investors watch for this kind of signal. When insiders consistently sell into strength, it can be a subtle warning that they see risks or limited upside ahead. Callies' actions, following a prior sale earlier in the year, create a narrative of profit-taking rather than confidence-building. In a market where every share of insider buying is scrutinized, the absence of that kind of skin in the game is itself a data point.

Institutional Smart Money: Pulling Back

The divergence between insider moves and institutional behavior is stark. While director John Callies was trimming his position, a major institutional player was making a much larger exit. In the third quarter of 2025, Inspire Investing LLC trimmed its stake in ePlus by 59.3%, selling 11,144 shares and leaving a position worth about $543,000. This was a significant reduction from a whale wallet that once held a much larger slice of the company. What makes this sell-off notable is the context. It happened during a period of strong financial performance. The company's fourth quarter of fiscal 2025 delivered double-digit EPS growth, with diluted earnings per share climbing 15.9% year-over-year. The stock was climbing, and the fundamentals were improving, yet a professional investor chose to dramatically reduce its exposure.

This creates a clear signal of divergence. When insiders are selling into strength and a major institutional holder is pulling back, it suggests the smart money isn't seeing the same catalysts as the bulls. It points to a lack of conviction at the professional level, which often anticipates shifts in earnings or industry trends before they hit the headline. The institutional reduction, coinciding with a period of solid results, adds uncertainty about what the next real driver for the stock might be. For now, the smart money is not accumulating.

The Financials: Strong Performance vs. Insider Exit

The numbers tell a story of resilience. For the fourth quarter of fiscal 2025, ePlus posted double-digit EPS growth, with diluted earnings per share climbing 15.9% to $0.95. More importantly, the company's operational efficiency improved, with adjusted EBITDA up 19.1% and the consolidated gross margin expanding to 29.3% from 23.5%. This margin expansion, driven by a shift toward higher-margin services, is a key positive signal.

Yet, this solid performance stands in contrast to the moves of those with the most to lose. While the financials show strength, the director's sales and the institutional reduction suggest a lack of skin in the game. The smart money appears to be taking profits, not betting more. This divergence is the real story.

A potential headwind is emerging in the core business. The company's technology business net sales decreased 10.4% in the quarter. That's a significant decline in the product segment, which the company is trying to offset with its services ramp. The profit-taking by insiders and institutions could be a preemptive move, anticipating that this technology sales weakness might pressure future earnings growth, even as margins improve. In other words, the financials show a company adapting, but the insiders and institutions are betting that the adaptation isn't enough to drive the stock higher from here.

Catalysts and What to Watch

The real test now is what happens next. The insider and institutional exits create a setup where the stock's path hinges on two key signals: what the company says and what its top executives do with their own money.

First, watch for CEO and CFO stock sales in upcoming 13F filings. The director moves are telling, but the actions of the CEO and CFO are a stronger signal of alignment with the company's future. Their transactions, especially any sales, will be scrutinized as a direct measure of their skin in the game. If they follow the director's lead and sell into strength, it would confirm a lack of conviction from the top. If they buy, it would be a powerful counter-narrative. For now, the evidence shows only grants and gifts, but the next filing will reveal if that changes.

Second, monitor the company's guidance for fiscal 2026, particularly regarding the technology business net sales. That segment declined 10.4% in the fourth quarter, and it remains the core of the business. Management's outlook on whether this weakness is cyclical or structural will be critical. Any guidance that suggests the decline is stabilizing or turning around could re-ignite interest. Conversely, if they acknowledge ongoing pressure, it would validate the smart money's cautious stance and likely cap the stock's upside.

The key risk is that repeated insider selling, if it continues, could signal a persistent lack of alignment with retail investors. When the people who know the business best are taking money off the table, it creates a psychological ceiling. Even if the fundamentals hold, the narrative of insiders betting against the stock can cap its upside. The smart money is already pulling back; the next move by the CEO and CFO will determine if they are joining them or betting against the trend.