Investing

CEOs and Other Insiders Are Buying Shares of These 7 Stocks

Trey Thoelcke

Published: May 19, 2024 9:45 am

24/7 Insights

• As earnings-reporting season winds down, more insiders are free to buy and sell their own stocks.
• CEOs and others have lately been acquiring shares following quarterly reports.

With the earnings-reporting season winding down, the windows for making insider purchases are opening up. In the past week, chief executives and other insiders have been scooping up shares in the wake of quarterly reports, sometimes taking advantage of pullbacks to bolster their stakes. Let’s take a look.

Is Insider Buying Important?

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 was in full swing, many insiders were 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.

Red Rock Resorts

• Buyer(s): 10% owner Lorenzo Fertitta
• Total shares: 800,000
• Price per share: $50.39
• Total cost: around $40.3 million

This director and beneficial owner acquired these shares from his brother, Red Rock Resorts Inc. (NASDAQ: RRR) CEO Frank Fertitta. The Las Vegas-based gaming and entertainment company recently said earnings fell less than expected but growing revenue fell short of estimates in the latest quarter. That compares with top and bottom line beats in the prior quarter. The share price is about 12% lower than three months ago but around 12% higher year over year. The $62.38 consensus price target is less than the 52-week high but signals almost 20% upside from the current share price. All but one of the 10 analysts who cover the stock recommend buying shares.

Coupang

• Buyer(s): a director
• Total shares: almost 919,300
• Price per share: $21.82 to $22.58
• Total cost: nearly $20.4 million

This Seattle-based e-commerce platform operator reported that sales were better than expected in the latest quarter, yet earnings fell short of estimates. This was in part due to the recently acquired Farfetch. Year to date, Coupang Inc. (NYSE: CPNG) stock is up more than 42%, despite retreating a bit after the report. Shares have outperformed the broader market in the past year. The $25.12 consensus price target is greater than the 52-week high, and it is more than 9% higher than the current share price. Analysts on average recommend buying shares, and the stock is also a top pick of billionaires Bill Gates and Stanley Druckenmiller.

Shift4 Payments

• Buyer(s): CEO Jared Isaacman
• Total shares: over 85,900
• Price per share: $66.84 to $67.32
• Total cost: more than $5.7 million

Shift4 Payments Inc. (NYSE: FOUR) is a Pennsylvania-based provider of payment processing technology. Isaacman is also founder and a 10% owner with a stake now up to more than 582,800 shares. The company reaffirmed guidance despite missing estimates on the top and bottom lines for the most recent quarter and despite uncertainty over whether the company will be acquired. The stock popped about 16% in the past week but is still down almost 4% since the beginning of the year. Analysts see about 22% upside in the next 52 weeks, given their mean price target of $86.32. The consensus recommendation is to buy shares. But note that the company’s CFO just sold almost 723,400 shares.

Treace Medical Concepts

• Buyer(s): CEO John Treace and five directors
• Total shares: more than 972,300
• Price per share: $4.50 to $5.35
• Total cost: over $4.5 million

Florida-based orthopedic medical devices maker also posted quarterly results lately, and it exceeded expectations on the top line but posted a wider net loss. Treace Medical Concepts Inc. (NASDAQ: TMCI) stock tumbled afterward to a post-IPO low of $3.92. But shares were last seen changing hands for more than the purchase price range above. The $6.60 consensus price target is much less than the 52-week high, but hitting that target would be a gain of more than 17% for the stock. The CEO’s stake is up to more than 6.2 million shares, and he is also a beneficial owner.

Prospect Capital

• Buyer(s): CEO John Barry
• Total shares: 803,000
• Price per share: $5.46 to $5.48
• Total cost: nearly $4.4 million

Prospect Capital Corp. (NASDAQ: PSEC) recently posted fiscal third-quarter earnings that topped analysts’ expectations. The asset management firm has paid a monthly dividend of $0.06 per share since 2017. In 2013, the stock retreated 14%, and it is down more than 6% year to date, despite a pop of almost 3% in the past week. Wall Street is less enthusiastic than Barry, as their consensus price target is less than the current share price, and none of the five analysts who cover the stock recommend buying it. Other top executives have bought shares in the past six months, and the CEO’s stake is up to almost 65.8 million shares, making him a beneficial owner.

Also see Warren Buffett Is Collecting $1 Billion a Year in Passive Income From This Stock Alone.

Grocery Outlet

• Buyer(s): two directors
• Total shares: 110,000
• Price per share: $19.90 to $20.90
• Total cost: almost $2.3 million

Earlier in the year, Grocery Outlet Holding Corp. (NASDAQ: GO) appointed its first chief operating officer and completed an acquisition. However, earnings results for the most recent quarter were disappointing. Since the report, the retailer’s stock has retreated about 15%. After hitting a 52-week low of $19.73, the share price has bounced back to above the directors’ purchase price range. Analysts overall see the stock rising to $26 in the next year, but less than half of them recommend buying shares. Note that a number of insiders, including the CEO, sold shares throughout March.

Akamai Technologies

• Buyer(s): CEO F. Thomson Leighton
• Total shares: 22,000
• Price per share: $92.36 to $92.91
• Total cost: more than $2.0 million

Though Akamai Technologies Inc. (NASDAQ: AKAM) topped first-quarter earnings projections, the stock tumbled on weak guidance, and several price targets were lowered. Meanwhile, the cloud computing company continues to make acquisitions. The stock has retreated about 6% since the earnings report and is down almost 19% since the beginning of the year. The latest consensus price target of $115.19 indicates that analysts see upside of almost 20%  in the next 52 weeks. One analyst has its price target set at $135. The share price has not been that high in more than a decade. Note that Leighton’s stake is up to more than 2.3 million shares.

And Other Insider Buying

In the past week or so, some insider buying was reported at B&G Foods, BioCryst Pharmaceuticals, Ginkgo Bioworks, Hain Celestial, Kennametal, Light & Wonder, Ovintiv, Papa John’s, Public Storage, Rocket Companies, RXO, Shenandoah Telecommunications, STAAR Surgical, SunCoke Energy, Usa Compression Partners, and Warner Bros Discovery as well.

∴