[Editor’s Note: This article is updated each week with the latest insider moves.]
There are many reasons why an insider of a company may sell their stock. They may need to raise money for things such as a home purchase and a divorce settlement. However, there is only one reason why there would be insider buying of a stock. They believe that they will profit because it is currently undervalued.
Insiders are people who have access to confidential information about a company. There have been numerous cases over the years where insiders take advantage of this in order to profit. For example, suppose an insider knows that news is about to be released that will make the stock go higher. The insider could buy it from a shareholder who does not have access to the news.
One of the rules that the SEC has established to protect investors from this type of illicit activity is to require the insiders to publicly disclose when they are buying or selling their stock. This will help to prevent unethical insiders from taking advantage of uninformed investors.
When I am thinking about buying a stock, I always like to see what the insiders are doing. I especially like to see if they are buying after the stock has seen a dramatic drop in price. This could be a sign that the stock is a good value at current levels.
Here are seven stocks that insiders have been buying after they made large moves lower.
The Chemours Company (CC)
The Chemours Company (NYSE:CC) sells performance chemicals in markets all over the world.
The price of CC stock has dropped from $40 a share to current levels around $16 since just this past April. This is due to the fact that the company has missed earnings estimates and reduced its guidance. Because of this, many of the firms that follow it on a research basis have reduced their ratings.
Mark Newman is a Senior Vice President and the Chief Operating Officer of Chemours. He must believe that the stock is a great value at these levels because he just made a significant personal investment. Maybe he is attracted to the 6.1% dividend that the stock is currently yielding.
On Sept. 11 he paid an average price of $16.42 for 20,000 shares. This was an investment of almost $330,000.
Flowtek Industries Inc. (FTK)
Flowtek Industries Inc. (NYSE:FTK) provides chemistry and other services to companies in the oil and gas industry.
FTK stock dropped by about 40% in early August when shareholders were disappointed with earnings results. Before the report, shares were trading around $2.80. When the results were released, the stock fell to $2.
The loss for the quarter was 21 cents. In fiscal 2018, the company reported a loss of $1.21 a share. This was significantly worse than the loss of 44 cents a share that was reported in 2017.
David Nierenberg is a Director of the company. He must think that the sellers have overreacted to this news because he just made a substantial investment of almost $650,000. Between Sept. 10 and Sept. 12 Nierenberg acquired about 270,000 shares of stock.
Signet Jewelers LTD. (SIG)
Signet Jewelers LTD. (NYSE:SIG) sells jewelry, watches and other products.
Like many other retailers, Signet has faced some challenges. This has caused the price of the stock to lose more than half of its value between March and early September.
After reaching a 10-year low, SIG stock rallied after it reported earnings that were better than estimates. It also raised its guidance.
Two insiders of this company must think that things are turning around and that this rally will continue. They each just made large purchases of the stock. Virginia Drosos is the CEO of Signet. She just made an investment of over $50,000 when she paid $14.14 for 4,000 shares.
Joan Hilson is the Chief Financial Officer. She made an even larger investment when she bought 7,500 shares at $14.56 a share. This was almost $110,000. That’s not chump change.
Aerie Pharmaceuticals, Inc. (AERI)
Aerie Pharmaceuticals, Inc. (NASDAQ:AERI) develops and sells therapies for the treatment of eye diseases.
Over the past year, the price of AERI stock dropped by more than 60%. Last September, shares traded for over $60 a share. This September, shares traded below $20.
Because of this, there has been a significant amount of insider buying. Richard Rubino is the Chief Financial Officer of Aerie. He just invested $100,000 when he paid $19.93 for 5,040 shares.
Vicente Anido is the CEO of the company. He must also be bullish on the long-term prospects. He just made an investment of $500,000 when he recently bought 26,000 shares.
Wall Street is also bullish on the company; 10 firms follow it and 9 of them have buy ratings on it. The average target price is around $63. This is almost 3 times higher than where it is currently trading.
Phunware, Inc. (PHUN)
Phunware, Inc. (NASDAQ:PHUN) provides multiscreen-as-a-service cloud platforms for mobile devices.
Over the past few months, the price of PHUN stock has dropped from around $4 a share to as low as $1.14 in mid-August. Since then, it has had an impressive recovery and has rallied to current levels around $1.73.
There have been some positive developments for Phunware. In July, the company announced that is had been added to the Russel Microcap index. In addition, it also announced that it has partnered with L&T Technology Services to implement its platform on a corporate campus for an undisclosed Fortune 50 company.
Randal Crowder is the Chief Operating Officer of Phunware. He must believe that the stock will continue to rally. He recently bought almost 40,000 shares on the open market. There has been buying by other insiders as well.
Nektar Therapeutics (NKTR)
Nektar Therapeutics (NASDAQ:NKTR) develops drugs for cancer, autoimmune disease and chronic pain.
Over the past year, the price of NKTR stock has dropped from $80 per share to current levels around $20. This could be because the company has reported losses in each of the last four quarters. In the most recent quarter, the loss for Nektar was 63 cents a share.
Stephen Dobersten is a Senior Vice President and Chief Scientific Officer of the company. He must believe that the stock is a good value at these levels. He just invested $260,000 of his personal funds when he paid $17.28 for 15,000 shares.
The Street believes that the stock is undervalued as well; 13 firms follow NKTR stock. The average rating is overweight and the average target price is $39.45. This is almost twice as high as where it is currently trading.
Meredith Corporation (MDP)
Meredith Corporation (NYSE:MDP) operates as a diversified media company.
MDP stock dropped by almost 25% in early September when the company reported earnings that disappointed investors. Since then it has recovered somewhat.
Thomas Harty is the President and CEO of the company. He must believe that the sellers overreacted when they knocked the stock down. He just paid $35.02 for 12,000 shares. This was a personal investment of more than $420,000.
Five Wall Street research firms follow Meredith and they seem to like it as well. The average rating is overweight. The average target price is $48.80. This is about 10 dollars higher than where it is currently trading.