The first full week of May did not bring more notable insider purchases from Warren Buffett. However, even as the earnings reporting season has begun to slow in the past week some other insiders and beneficial owners were adding to their stakes. Let’s take a look.
Is Insider Buying Important?
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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 while earnings-reporting season is in full swing, 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 or so, starting with the largest and most prominent.
Vestis
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- Buyer(s): 10% owner Corvex Management and two directors
- Total shares: almost 3.6 million
- Price per share: $9.21 to $10.66
- Total cost: more than $35.6 million
Vestis Corp. (NYSE: VSTS) is a Georgia-based uniform and workplace supplies provider that spun out of Aramark in 2023. When the recent fiscal second-quarter report fell short of expectations, the shares took a hit. The stock is down about 50% since the beginning of the year, but only 36% or so since last fall’s initial public offering. Shares have traded as high as $22.37 so far but were last seen changing hands within the purchase price range above. The consensus recommendation of analysts is to buy shares.
Sensata Technologies
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- Buyer(s): a director
- Total shares: over 268,300
- Price per share: $38.98 to $40.31
- Total cost: more than $10.6 million
This Massachusetts-based industrial products manufacturer recently topped first-quarter estimates on the top and bottom lines. That prompted at least one analyst to upgrade Sensata Technologies Holding PLC (NYSE: ST) stock and others to raise their price targets. Shares rallied and are now up over 15% year to date, as well as almost 36% higher than six months ago. They are also higher than the director’s purchase price range. The $47.27 consensus price target indicates that analysts currently see about 11% further upside in the next 12 months. The high price target is all the way up at $60 a share.
EyePoint Pharmaceuticals
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- Buyer(s): 10% owner Cormorant Asset Management
- Total shares: 850,000
- Price per share: $11.08 to $12.95
- Total cost: nearly $10.1 million
EyePoint Pharmaceuticals Inc. (NASDAQ: EYPT) is a Massachusetts-based biotech focused on treatments for the eye. It just posted mixed first-quarter results, and before that reported disappointing diabetes treatment trial results. As a result, the share price is off more than 45% year to date. The buyer took advantage of the pullback to boost its stake to over 8.3 million shares. Note that the stock is still about 84% higher than a year ago. Analysts on average anticipate the shares will reach $40.11 in the next year, which would be a gain of over 237%.
Aon
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- Buyer(s): a director
- Total shares: 10,000
- Price per share: $275.34 to $277.67
- Total cost: over $2.7 million
Ireland-based AON PLC (NYSE: AON) recently posted first-quarter results that fell short of analysts’ expectations. Earlier, it announced the retirement of its chief financial officer, and it boosted its quarterly dividend by 10%. Shares were last seen trading for much less than the director’s purchase price range, after falling around 9% in the past month. The stock is more than 13% lower than a year ago. However, analysts have a consensus target price of $327.36, which would be a gain of more than 13%. The high price target is $413, but only six of 19 analysts who cover the stock recommend buying shares.
Also see Warren Buffett Is Collecting $1 Billion a Year in Passive Income From This Stock Alone.
RXO
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- Buyer(s): 10% owner MFN Partners
- Total shares: more than 135,400
- Price per share: $20.07 to $20.40
- Total cost: over $2.7 million
This North Carolina-based transportation company posted mixed first-quarter results but touted volume growth. The beneficial owner returned to the buy window after the report and increased its stake in RXO Inc. (NYSE: RXO) to over 17.3 million shares. The stock inched up after the report to slightly above the latest purchase price range, but it is still down about 11% year to date. For the time being, analysts are cautious though, as their mean price target is less than the share price and their consensus rating is Hold.
Macerich
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- Buyer(s): CEO Jack Hsieh and other executives
- Total shares: less than 158,400
- Price per share: $14.26 to $16.06
- Total cost: almost $2.3 million
April ended with a disappointing quarterly report from Santa Monica-based Macerich Co. (NYSE: MAC). The real estate investment trust announced a chief executive transition earlier this year, and the new CEO just acquired nearly $2 million worth of shares. The stock retreated but bounced back after the report. The share price is about 10% lower than three months ago but still within the purchase price range above. Analysts don’t currently expect any real upside, as their consensus price target is hardly higher than the share price. Only five of 19 analysts recommend buying shares.
Walt Disney
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- Buyer(s): director
- Total shares: 20,000
- Price per share: $105.98 to $106.07
- Total cost: around $2.1 million
When Walt Disney Co. (NYSE: DIS) posted fiscal second-quarter results, streaming revenue showed surprising improvement. Now that the proxy war with Nelson Peltz is in the rearview mirror, the stock is more than 17% higher year to date. Yet it was last seen near the lower end of the director’s purchase price range. The consensus price target is $116.37, which would be a gain of nearly 9.9% in the next 52 weeks. Analysts on average recommend buying shares of this entertainment giant.
And Other Insider Buying
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In the past week or so, some insider buying was reported at American Homes 4 Rent, Blackstone, Caesars Entertainment, Caterpillar, Consolidated Edison, Crown Castle, Diebold Nixdorf, Ecolab, Energy Fuels, Herbalife, Hexcel, Hillenbrand, Kulicke and Soffa Industries, Levi Strauss, Macerich, Martin Midstream Partners, Penn Entertainment, Ryman Hospitality Properties, Range Resources, SoFi Technologies, Transdigm, and Westamerica Bancorp as well.
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