Investing

Stock Offerings Prompt Big Insider Buying

Trey Thoelcke

Published: February 27, 2024 8:45 am

Public offerings of stock tempted some insiders, including a chief executive, to increase their stakes in a couple of biotechs and an industrial products maker. Also, an insider stepped up to support an online delivery service provider struggling to gain momentum. These were among the most notable insider purchases of the third week of February.

A well-known adage reminds us that corporate insiders and 10% owners really only buy shares of a company because they believe the stock price will rise and they want to profit from it. Thus, insider buying can be an encouraging signal for potential investors. This is all the more so during times of uncertainty in the markets, and even when markets are near all-time highs.

Remember that with the earnings-reporting season still underway, many insiders are prohibited from buying or selling shares. Below are some of the more notable insider purchases that were reported in the past week

Maplebear

• Buyer(s): a director
• Total shares: more than 2.0 million
• Price per share: $27.01 to $29.99
• Total cost: over $57.6 million

The recent Maplebear Inc. (NASDAQ: CART) earnings report came with announced layoffs that included the chief operating and technology officers. The stock pulled back more than 7% afterward but has recovered and is now up 31% or so year to date. The share price is still over 9% lower than at last year’s initial public offering. The operator of the Instacart delivery service has a cautious Buy recommendation from the consensus of analysts. However, their mean price target of $33.95 suggests there is almost 14% upside potential in the next 12 months.

Iovance Biotherapeutics

• Buyer(s): three directors
• Total shares: almost 5.3 million
• Price per share: $9.15
• Total cost: over $48.3 million

These directors took advantage of a secondary offering of Iovance Biotherapeutics Inc. (NASDAQ: IOVA) common stock. The U.S. Food and Drug Administration recently approved this biopharmaceutical company’s melanoma treatment. The share price is up more than 64% since then to well above $16. That is a handy gain for the directors, particularly the one who scooped up 5 million of those shares. Analysts see plenty more room for the shares to run, given their $24.42 consensus price target. (See which are the deadliest cancers in America.)

Prime Medicine

• Buyer(s): a director
• Total shares: 3.2 million
• Price per share: $6.25
• Total cost: $20.0 million

Another public offering of common stock prompted this insider buying. Prime Medicine Inc. (NASDAQ: PRME) is focused on genetic therapies, and the stock is a top Cathie Wood Ark Genomics ETF pick. But the share price is more than 7% lower than at the beginning of the year, as well as down over 53% year over year. That is a couple of bucks higher than the offering price, though. Note that analysts on average recommend buying shares, and their consensus price target is up at $17.88.

Gates Industrial

• Buyer(s): CEO Ivo Jurek and three other directors
• Total shares: almost 1.1 million
• Price per share: $12.20 to $13.24
• Total cost: more than $12.9 million

Jurek and two of the directors bought into an offering of stock from selling stockholders affiliated with Blackstone. The director who was late to that party paid over a dollar more per share. Denver-based industrial product maker Gates Industrial Corp. PLC (NYSE: GTES) posted solid quarterly results recently, and shares are up more than 14% since then and were last seen trading above the buyers’ purchase price range. The consensus recommendation is to buy shares, and hitting the analysts’ mean price target would be a gain of over 10% for the stock.

Exelixis

• Buyer(s): a director
• Total shares: 190,000
• Price per share: $20.57 to $20.78
• Total cost: over $3.9 million

In its most recent quarterly report, oncology company Exelixis Inc. (NASDAQ: EXEL) posted better-than-expected earnings and strong revenue growth. Shares pulled back afterward but recovered and were last seen trading above the buyer’s purchase price range. The stock is up almost 25% year over year. Note that hedge fund manager Jim Simons also increased his stake after the earnings report. Analysts on average recommend buying shares, and their consensus price target is up at $26.74.

And Other Insider Buying

In the past week or so, some insider buying was reported at Agree Realty, America’s Car-Mart, Biogen, Blackstone, Energizer, First Citizens Bancshares, Goodyear, Herbalife, Humana, Phillips 66, and Rocky Mountain Chocolate Factory as well.