5 Stocks Insiders Are Buying as the Fed Hikes Interest Rates

stocks insiders are buying - 5 Stocks Insiders Are Buying as the Fed Hikes Interest Rates

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  • GameStop (NYSE:GME) – Insiders purchased 105,500 shares between March 21-24.
  • PLBY Group (NASDAQ:PLBY) – CEO Ben Kohn purchased 25,000 shares on March 21.
  • Eastman Kodak (NYSE:KODK) – Insiders purchased 2.7 million shares on March 18 and March 21.
  • Bumble (NASDAQ:BMBL) – Director Amy Griffin purchased 35,200 shares on March 17.
  • DocuSign (NASDAQ:DOCU) – CEO Dan Springer purchased 66,882 shares on March 15.

On March 16, the Federal Reserve announced that it would raise interest rates for the first time since December 2018. The Fed agreed to raise rates by 25 basis points, which will increase the rate to between 0.25% and 0.50%. Factoring in future rate hikes and high inflation, many investors are now forecasting a recession. However, this hasn’t stopped insiders from buying shares in their own companies. So, why should investors care what insiders are buying?

Well, many investors love to track which stocks insiders are buying. Insiders are thought to have the most knowledge of their company.

Plus, in a study from the MIT Press, University of Michigan professor H. Nejat Seyhun tracked stocks that insiders bought over a 19-year period. Seyhun discovered that stocks outperformed the market by 4.5% following an insider purchase. Stocks following an insider sale underperformed the market by 2.7%. The conclusion from this study clearly supports the importance of tracking insider activity.

So, what does this mean for retail investors? For starters, insider buying may be more beneficial to track than insider selling. This is because figuring out why an insider sold is a lost cause. As famed investor Peter Lynch once said, “Insiders might sell their shares for any number of reasons, but they buy them for only one: They think the price will rise.”

With that in mind, let’s take a look at five stocks that insiders have been buying.

GME GameStop $188.24
PLBY PLBY Group $14.07
KODK Eastman Kodak $7.08
BMBL Bumble $29.39
DOCU DocuSign $106.47

Stocks Insiders Are Buying: GameStop (GME)

Retailers walk past a GameStop (GME stock) store in New York City, New York.
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GameStop has been the face of retail investing since its historic rise during January 2021. The meme stock has enjoyed a generous March, as shares of the video game and electronics retailer are up 25% month to date.

In recent news, Boston Consulting Group (BCG) announced that it had sued GameStop for $30 million in fees after “setting the company on a more sustainable path” during 2019. The consulting group claimed that it was owed money for “tens of thousands of hours” of work to help GameStop revamp its business. In addition, BCG stated that it was responsible for increasing memberships to GameStop’s loyalty program by 40%, which increased profit by $73 million.

“It is confounding that the high-priced consultants at BCG claim to have delivered hundreds of millions in value for GameStop during a period when share price, sales and debt were at perilous levels,” GameStop responded in a statement.

Despite the lawsuit, multiple insiders have purchased stock this month. These insiders include Ryan Cohen, chairman of GameStop.

  • March 21: Director Lawrence Chen purchased 4,000 shares of GME stock at prices ranging from $93.99 to $96.45. After the purchase, Chen now owns 8,022 shares.
  • March 22: Chairman Ryan Cohen purchased 100,000 shares of GME stock at prices ranging from $96.85 to $108.27 through his investment firm, RC Ventures. After the purchase, Cohen and RC Ventures jointly own 9.1 million shares, making them the largest shareholder.
  • March 24: Director Alain Attal purchased 1,500 shares at an average price of $129.91. After the purchase, Attal now owns 130,423 shares.

Investors should also note that Chief Accounting Officer Diana Saadeh-Jajeh sold 743 shares at an average price of $125 on March 22. After the sale, Saadeh-Jajeh still owns 18,825 shares.

PLBY Group (PLBY)

Image of the Playboy (PLBY) logo at the company's Westwood, California headquarters.
Source: Alex Millauer / Shutterstock.com

PLBY Group operates as a media lifestyle and entertainment company, most known for its Playboy magazine. However, the company is actively working to expand its reach beyond Playboy. Last year, the company announced several new developments.

The first of these is CENTERFOLD, a platform designed for creators to interact with their fans. PLBY Group also brought on popular artist Cardi B as CENTREFOLD’s founding creative director. The platform’s roadmap includes features related to “digital content production, live streaming, [and] blockchain integration,” among others.

Speaking of the blockchain, PLBY Group also announced last year that it would be entering into the world of non-fungible tokens (NFTs). Last October, the company released 11,953 rabbit NFTs, called Rabbitars, to honor Playboy’s heritage. Owners of the Rabbitars are granted special privileges, such as member-only access to “events, merchandise, artwork, and exclusive artist collaborations.”

It seems that PLBY Group is taking full advantage of the creator and Web 3.0 economy. Now, PLBY Group’s CEO is stepping in and buying shares.

According to a Form 4 received by the SEC, CEO Ben Kohn purchased 25,000 shares of PLBY stock on March 21. The shares were purchased at prices ranging between $15.14 and $15.34. Furthermore, Kohn purchased theses shares indirectly through two entities of which he is a trustee, Cold Springs Trust and Bircoll Kohn Family Trust.

Stocks Insiders Are Buying: Eastman Kodak (KODK)

Kodak (KODK) logo on sign at company headquarters
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Kodak has enjoyed an impressive 2022 thus far, up more than 30% year to date. The photography and digital innovations company also reported earnings this month, which helped KODK stock fly as much as 30% higher. Revenue came in at $1.15 billion, up 12% YOY. In addition, the company reported a positive earnings before interest, taxes, deductions, and amortization (EBITDA) of $11 million, compared with negative $1 million last year.

Kodak has involved itself with several industries over the past few years. In 2018, the company launched KODAKCoin, a cryptocurrency. The project turned out to be a bust, and Kodak Coin is currently not tradable. Then, in 2020, Kodak announced that it had received a loan from the government to assist in making Covid-19 drug ingredients. The loan was eventually frozen, with a federal watchdog stepping in to investigate “evidence of conflicts of interest or official misconduct.” While no wrongdoing was found, the agency concluded that Kodak had announced the loan “while several steps in the process were still underway.” Ultimately, Kodak did not receive the loan.

A company pivoting to different business industries generally signals a red flag. However, that hasn’t stopped insiders of Kodak from buying stock.

David Chene and Darren Richman, directors on Kodak’s board, purchased 2.7 million shares of KODK stock on March 18 and March 21. The shares were purchased indirectly through Kennedy Lewis Investment Management at prices ranging between $5.07 and $6.18. Both Chene and Richman serve as managing partners at Kennedy Lewis.

In addition to Chene and Richman, another insider is buying as well. On March 23 and March 24, Michael Sileck purchased 17,500 shares of KODK stock at prices ranging between $6.42 and $6.48. After the purchase, Sileck now owns a total of 27,500 shares.

Bumble (BMBL)

BUMBLE (BMBL) app on a smartphone
Source: XanderSt / Shutterstock.com

Dating app Bumble made its debut on the Nasdaq last year to much fanfare. Since then, shares of BMBL stock have lost more than 60% of their value. However, the company is looking to turn things around.

Bumble reported earnings this month, and shares subsequently buzzed as much as 40% higher. Revenue came in at $208.2 million, up 25.7% year over year (YOY). Revenue from the Bumble app accounted for $150.5 million, up 42% YOY. Furthermore, paying users clocked in at 1.6 million, which was up 29% YOY. For Q1, Bumble expects revenue to be between $207 million and $210 million.

With these numbers fueling Bumble, an insider is buying shares.

According to a Form 4 received by the SEC, director Amy Griffin purchased 35,200 shares of BMBL stock. It should be noted that Griffin owns the shares indirectly, as her spouse made the purchase. However, the purchase still demonstrates her bullish stance on Bumble. After the purchase, Griffin now indirectly owns 152,700 shares. The last time Griffin purchased shares was May 26, 2021. On that day, the director indirectly purchased 117,500 shares at prices ranging between $41.68 and $43.48.

Stocks Insiders Are Buying: DocuSign (DOCU)

Docusign (DOCU) logo on building
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DocuSign was a major beneficiary of the Covid-19 pandemic. However, with the pandemic seemingly coming to an end, shares of DOCU stock have suffered. Making matters worse, DocuSign reported earnings this month, and the results were not pretty.

For starters, the e-signature company fell short of revenue guidance for the second straight quarter. Revenue guidance for Q1 is estimated to be between $579 million and $583 million, which is well below the analyst consensus of $594 million. For full year fiscal 2023 guidance, DocuSign estimates revenue to be between $2.47 billion and $2.48 billion, again falling below the analyst estimate of $2.61 billion.

CEO Dan Springer attributed the low guidance to several factors. During the pandemic, many programs and companies, such as the Payroll Protection Program (PPP), used DocuSign’s service for one-time purposes. In addition, some companies bought more signature volume during the pandemic than they needed, which hurt renewal revenue.

Disappointing guidance aside, Springer still believes that his company has room to grow.

On March 15, Springer purchased 66,882 shares of DOCU stock through his trust, The Daniel Springer Revocable Trust. Springer purchased these shares at prices ranging from $73.63 to $76.44. The purchase amounted to nearly $5 million. Springer purchased shares of DocuSign during December and January as well, which resulted in a transaction value nearing $10 million. It’s safe to say that the CEO believes e-signature solutions are here to stay.

On the date of publication, Eddie Pan did not hold (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.


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