- Asana (ASAN): Asana’s CEO and co-founder has bought over $1 billion worth of shares in the past year.
- Ford (F): Executive Chairman Bill Ford recently added several million of shares to his personal holdings.
- GameStop (GME): Chairman Ryan Cohen’s recent add-on purchase has helped this meme play bounce back.
- Eastman Kodak (KODK): Major debt holder has been buying up its common shares.
- Oric Pharmaceuticals (ORIC): After collapse in price, Oric’s CEO has significantly increased his position.
- Revolution Medicines (RVMD): During March, a director bought millions worth of shares.
- Sofi Technologies (SOFI): Insiders have been gobbling up shares since the fintech firm’s move to single-digit prices.
Insider buying is a factor many investors take into account before deciding to buy a stock for themselves. After all, if those in the know are buying, they must know something, right? Studies do back the argument that piggybacking on what insiders are buying can be a profitable strategy.
But before you run out and buy every stock that’s seeing big purchases by the C-suite, board members, and large shareholders, keep in mind that inside purchases aren’t a “cheat code” for investing success.
That is, it’s not as if every insider buy is based on someone knowing something big is just around the corner. As a Seeking Alpha commentator argued back in 2020, there are plenty of examples of insiders making the wrong call, going bullish on their own stock and seeing underwhelming returns.
Still, even if it’s best not to buy every stock experiencing insider buying, they may nonetheless be worth looking into. With that, here are seven stocks that have recently seen large amounts of insider purchases:
- Asana (NYSE:ASAN)
- Ford (NYSE:F)
- GameStop (NYSE:GME)
- Eastman Kodak (NYSE:KODK)
- Oric Pharmaceuticals (NASDAQ:ORIC)
- Revolution Medicines (NASDAQ:RVMD)
- Sofi Technologies (NASDAQ:SOFI)
Insider Buying: Asana (ASAN)
The tech stock sell-off since November has been bad news for investors in ASAN stock. Since hitting an all-time high of $145.79 per share, shares in the workflow management software provider have dropped to around $42 per share. That’s a more than 70% decline in a matter of months.
Yet while it’s seen big declines, some may point to insider purchases as a reason to be bullish on Asana. CEO and co-founder Dustin Moskovitz has bought over a billion dollars worth of shares since last June. Keep in mind, though, that Moskovitz made this decision to buy well in advance, using what are known as 10b5-1 plans.
This is done to stay in compliance with insider trading laws. It may tell us that he’s bullish over a long time frame about his company. In the near term, however, a rebound for hard-hit ASAN stock may hinge more on tech continuing to make a recovery.
With interest rates going up and the risk of recession, a recovery may prove challenging. Nevertheless, if you believe today’s valuation too heavily discounts its prospects over the long term, it is good to know that the man at the helm seemingly shares the same view.
As the supply chain crisis affects auto production, and as “EV mania” takes a breather, shares in automaker Ford are no longer in hyperdrive. Down 18% year-to-date, it could remain in neutral for quite some time. At least until headwinds affecting the auto industry clear up, or once we see further progress with its big bet on electric-powered vehicles.
That said, while F stock may be stuck in neutral today, that doesn’t mean it’s permanently out of the fast lane. A move to even higher prices may be in the cards. That may be the view of Executive Chairman Bill Ford, who has been adding to his personal position this month.
Insider buying by Ford, the great-grandson of founder Henry Ford, is a strong sign he’s confident that the Detroit automaker’s pivot to EVs, plus its cost reduction plan, will result in higher earnings and a much higher stock price over time.
Considered a high quality EV play by Louis Navellier, recent insider purchases help boost the bull case for Ford stock.
In early to mid-March, with its move below $100 per share, it may have seemed like the end of the road for GME stock. But since Chairman Ryan Cohen’s boosting of his stake in the video game retailer, “meme mania” has returned in a big way.
Zooming back toward $200 per share, skeptics (such as myself) have been proven wrong once again. Yet while this meme legend continues to trade at a premium to what’s likely its true underlying value (below $50 per share), the bear case could still ultimately win out.
If the chances of a recession continue to climb, the market’s rebound in recent weeks could reverse course. Stocks overall could take a dive. Meme plays especially so. Although it may not mark “game over” for GameStop, it could result in big losses for those who dived in following Cohen’s recent insider buy.
In short, investor psychology and market sentiment drives this stock more than fundamentals (or insider purchase trends). I wouldn’t view this recent news as a sign to buy.
Insider Buying: Eastman Kodak (KODK)
The insider buys mentioned above have been those involving the chairman and/or CEO making a big purchase. In the case of KODK stock though, it’s been an institutional investor that has been quickly adding to an existing position.
In 2021, Kennedy Lewis Investment Management provided the famed company with $225 million in debt financing, plus bought $25 million worth of convertible notes. During March 2022, the firm accumulated a large position in its outstanding common stock through open market purchases. Today, it controls around 7.8% of its outstanding shares.
This buying spree may be the reason Eastman Kodak shares have been on a tear lately. In the past month, it’s up around 48%. So, is there any takeaway from this large lender becoming a large shareholder? For the past decade, Kodak is a shell of its former self. Since exiting bankruptcy in 2013, it’s now mainly a commercial printing company.
However, as InvestorPlace’s Chris MacDonald wrote on March 18, a new partnership with Imax (NYSE:IMAX) may be another reason for its latest run-up. Kennedy Lewis may be on the mark “backing up the truck” with its shares.
Oric Pharmaceuticals (ORIC)
Going public in 2020, biotech firm Oric Pharmaceuticals has dropped by more than 78%, mostly due to poor progress with its lead drug candidate. Prostate cancer treatment ORIC-101 performed poorly in its initial clinical trials, resulting in Oric scrapping its further development in March.
As a result, ORIC stock briefly fell into penny stock territory during the month. But since then it’s bounced back above $5 per share. The bounce coincided with news that CEO Jacob Chacko added significantly to his personal holding. With his recent purchase of $1.7 million worth of shares, Chacko has increased his position seven-fold.
Granted, Chacko didn’t own a lot of the stock to begin with. Yet putting so much money into what’s a speculative clinical-stage company may be a sign it can make up for its major setback with other candidates in its pipeline. Per its website, Oric has three other candidates in Phase 1 trials.
If you are active in biotech plays, this may be a name to add to your watchlist. If the details of its candidates line up with the confidence of its CEO, it may well just be worth it as a small position in a diversified portfolio of such high-risk plays.
Revolution Medicines (RVMD)
Another biotech firm, RVMD stock has seen increased attention and a big move higher thanks to some insider buying. Per data from Finviz.com, Thilo Schroeder, a member of the company’s board of directors, purchased millions worth of shares between March 23 and March 28.
Sure, it’s a drop in the bucket relative to Revolution Medicines’ market capitalization ($1.83 billion). Even so, it may be a vote of confidence in the future of its pipeline, which is focused mainly on treating cancers driven by RAS proteins (which make up 30% of human cancers).
If RVMD it can bring to market any of its candidates to treat colorectal, lung, or pancreatic cancer, it would bring big financial success for this company. That explains why, despite being in the pre-revenue stage, the market gives this company a valuation in the billions.
Like with Oric, this may be a better play for those experienced with the ins-and-outs of biotech investing. While Schroeder’s big insider purchase is a positive, it by itself doesn’t mean that after a 36% drop in the past year, RVMD stock is ready to surge back to past highs.
Insider Buying: SoFi Technologies (SOFI)
As InvestorPlace’s Eddie Pan reported on March 18 and March 29, there’s been a large amount of insider activity with SOFI stock this month, with the vast majority being purchases. CEO Anthony Noto, plus director Harvey Schwartz, have been adding to their positions.
That’s perhaps due to the fintech company’s move to single-digit prices during the month. Uncertainties about inflation, interest rates, and the economy have pushed this digital-first financial supermarket far below the high prices it commanded during 2021.
Does this mean you should buy now, as insiders dive in? Maybe, maybe not. As the company grows its platform, and with its bank charter is able to expand its lending abilities, this beaten-down growth play may ultimately live up to expectations.
Then again, you may want to wait for another round of weakness before buying. There may be minimal upside at today’s prices (around $10 per share). But if it moves to below $5 per share (which is possible), risk/return could be more in your favor.
On the date of publication, Thomas Niel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.