Insider trading can give outside investors great insights.
By insider trading, I do not mean the illegal kind. Illegal insider trading is what you hear about in the news, when the insiders of a company use information that the public doesn’t have in order to profit.
Insiders are people who have access to confidential information. In order to prevent them from taking advantage of this information, the Securities and Exchange Commission (SEC) requires they must publicly disclose transactions they make in their stocks. This means that anytime they buy or sell shares, they need to file a report with the SEC.
By looking at this information, insights can be gained into the future direction of the stock.
For example, insider buying could be a bullish signal. This is especially the case if there has been a large drop in the price of the stock just before the insiders acted.
And if a stock makes a large move higher and the insiders start selling, this could be a bearish signal. They probably would not be selling if they thought that it was going to keep rallying.
The following seven stocks have made large moves … and the insiders have been active.
- Trinity Place Holdings (AMEX:TPHS)
- Rev Group (NYSE:REVG)
- Earthstone Energy (NYSE:ESTE)
- Conagra Brands (NYSE:CAG)
- Gamestop Corporation (NYSE:GME)
- TransEnterix (AMEX:TRXC)
- Pros Holdings (NYSE:PRO)
Stocks with Insider Trading: Trinity Holdings (TPHS)
Trinity Holdings manages and develops real estate. Like many other real estate companies, the price of its shares went into a long and steady downtrend in the first part of 2018.
Over the past three years shareholders of Trinity have suffered. They have lost a lot of money. As you can see on the chart, the price of the stock reached $7 back in early 2018. Since then things haven’t gone so well. Now it’s trading below $2 per share.
But maybe things are going to turn around. There is reason to believe that at least one insider thinks so.
Matthew Messinger is the president and CEO of the company. He must believe the selloff is finally coming to an end. Messinger just bought 10,000 shares on Jan. 15 at $1.40 per share. This could be the bullish signal that TPHS shareholders have been waiting for.
Rev Group (REVG)
Rev Group designs, manufactures, and distributes vehicle aftermarket parts. It is also involved in aftermarket servicing.
Over the past three years, the share price has fallen from $32 to $9.13. It started falling in 2020 even before Covid-19 slashed the markets. Mark Skonieczny is the chief financial officer of the company. He must believe the stock is an attractive value at current levels. On Jan. 15 he purchased 15,000 shares at an average price of $9.09.
A handful of Wall Street analysts follow Rev Group, and collectively they seem to be in agreement with him Of the nine analysts following the stock according to Yahoo! Finance, six of them are calling it a buy and three think it’s a hold. However, their average price target is actually below the stock’s current price of around $12.
But Skonieczny must think the future lies the other way, and is investing a significant amount of his own personal money. His investment adds up to more than $135,000. This is solid proof that he thinks there are better times ahead for Rev Group and its shareholders.
Earthstone Energy (ESTE)
Earthstone Energy is in the oil and gas business and operates as a holding company. Back in 2014, shares of ESTE traded as high as $35. Then they went into a long and steady decline, bottoming out as the markets sank in early 2020. But after reaching levels around $1.60 last March, they have put together a recovery of sorts.
What caused this turnaround? Well in part, since early November the price of oil has soared by almost 60%. This has been driven by fears of regulations being imposed by the Biden administration. It has made companies in the energy industry more profitable. Many energy stocks have rallied since then.
In fact, the price of Earthstone has more than doubled.
But even with this recovery some insiders believe the shares are still undervalued. Enter the Warburg Pincus Private Equity Fund, an institutional money manger that seeks to invest in undervalued companies that it believes undergoing a turnaround.
The fund just made a $5 million investment into ESTE. It paid an average price of $3.99 per share on Jan. 12.
Conagra Brands (CAG)
Conagra Brands manufactures and sells processed and packaged foods. Some of the major brands that it produces are Hunts, Slim Jim, Chef Boyardee, P. F. Changs, Marie Callendar and Hebrew National.
CAG recently fell about 10% after some investors were disappointed with the earnings release.
Richard Lenny must think that the selling was an overreaction. He is a director at the company and he just made a significant purchase.
Lenny just made a personal investment of $370,000 into the stock. On Jan. 8, he paid an average price of $33.70 for 10,000 shares.
Wall Street covers this stock closely. Fourteen firms follow Conagra and provide research on it. They agree with Lenny that the stock is undervalued. The consensus estimate on it is a “strong buy” and the average target price is $38.06.
Gamestop Corporation (GME)
Gamestop is the world’s largest retailer of video games and consumer electronics. It was once a powerhouse, and back in 2013, Gamestop almost reached $60 a share.
But since then, shareholders have been disappointed. After a long and painful slide, GME finally broke under the $3 level last April. Many pundits predicted bankruptcy. It looked like it would be another victim of Covid-19, or of the slow death of brick-and-mortar shopping.
But some investors feel as though the company may have better times ahead. The stock price soared on the hope things would turn around. It was announced that activist investors joined the board of directors.
Some insiders of the company decided to take advantage of the large move in the price. They sold. Board Chairman Kathy Patterson Vrabeck sold about $1.4 million worth of her shares at $27.99 on Jan. 13. Raul Fernandez, a member of the board, sold $1.22 million at an average price of $35.28 on Jan. 14 and Jan. 15.
TransEnterix is a medical device company. In engages in the research, development, manufacturing and sale of products that are designed to enhance minimally invasive surgical procedures.
Since the beginning of January, the price of shares has skyrocketed. TRXC closed out 2020 at just 63 cents a share. Now they are trading above the $3 level.
David Milne is a director of the company. He is probably very happy with the recent rally. But he also decided that it was probably a good idea to take some money off the table. On Jan. 15, he sold 147,000 shares at an average price of $2.10.
Wall Street agrees. Five firms follow this company according to Yahoo — three buys and two holds.
Pros Holdings (PRO)
Pros Holdings is in the cloud computing industry.
Cloud computing sounds compilated but it isn’t. Under this model, companies essentially rent software. The hardware is held off site at a cloud computing center. With the traditional model, companies need to buy software and hardware. They would also need to pay for services and software upgrades. The cloud computing model frees users from this obligation.
Cloud computing stocks have performed well since the Covid-19 virus drove people to work at home. And probably because of all that, Pros Holdings has made some big gains since early November.
But two of the insiders at Pros Holdings have decided to take some money off of the table.
Roberto Reiner is the chief technology officer of the company. Scott Cook is the chief accounting Officer. Each are also directors. Both of these insiders must feel the stock is fairly valued. On Jan. 14, they each sold shares at $46.80.
On the date of publication, Mark Putrino did not have (either directly or indirectly) any positions in the securities mentioned in this article.