Investing

Buffett Back at the Buy Window, Plus Insider Buying at a Refiner, Biotechs, and More

Trey Thoelcke

Published: June 23, 2024 8:45 am

24/7 Insights

• Warren Buffett has purchased more of his favorite energy stock.
• A couple of biotech stocks and a recreational boat maker also saw sizable buys from insiders.

The past week saw some sizable insider purchases, highlighted by Warren Buffett once again bulking up on his favorite energy stock. Beneficial owners picked up shares of a refiner, an entertainment company, and a recreational boat maker, while a chief executive officer offered big support for his biotech firm. 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 when the new earnings-reporting season begins, many insiders will be prohibited from buying or selling shares. Below are some of the more notable insider purchases that were reported in the past week, starting with the largest and most prominent.

Occidental Petroleum

• Buyer(s): 10% owner Berkshire Hathaway
• Total shares: more than 2.9 million
• Price per share: $59.14 to $60.37
• Total cost: nearly $176.0 million

After scooping up over $105 million worth of shares in the prior week, Buffett returned to further bolster the Occidental Petroleum Corp. (NYSE: OXY) stake to almost 255.3 million shares, or almost 29%. The Houston-based company beat first-quarter earnings estimates, though revenues fell short. Shares are down around 4% since the report but were last seen trading above Buffett’s latest purchase price range. The share price is less than 5% higher than at the beginning of the year. The $71.72 consensus price target suggests almost 15% upside potential in the next 12 months.

PBF Energy

• Buyer(s): 10% owner Control Empresarial de Capitales
• Total shares: 638,000
• Price per share: $43.52 to $43.80
• Total cost: over $28.1 million

Refiner PBF Energy Inc. (NYSE: PBF) is based in Parsippany, New Jersey. It posted better-than-expected top and bottom line results for the first quarter. Since the earnings report was released, the stock is down more than 15%. The share price is up slightly year to date, while the Dow Jones industrials are up about 4% in that time. Analysts have a mean price target of $53.30, which is almost 21% higher than the current share price. Yet, only six of the 17 analysts who follow the stock recommend acquiring shares. Note that this owner’s stake is up to around 16 million shares.

Disc Medicine

• Buyer(s): two directors
• Total shares: over 305,500
• Price per share: $36
• Total cost: around $11.0 million

Massachusetts-based clinical-stage biopharmaceutical company Disc Medicine Inc. (NASDAQ: IRON) had an offering of common stock. In early May, it posted mixed quarterly results, accompanied by a business update. The share price is up more than 34% since the report, despite retreating about 11% in the past week. Shares were last seen changing hands for more than the recent offering price. Analysts anticipate that the stock will rise about 56% in the next 12 months to their mean price target of $64.33. No surprise, their consensus recommendation is to buy shares.

Falcon’s Beyond Global

• Buyer(s): 10% owner Katmandu Ventures
• Total shares: over 1.7 million
• Price per share: $41.95 to $43.45
• Total cost: more than $6.3 million

Orlando-based entertainment and hospitality company Falcon’s Beyond Global Inc. (NASDAQ: FBYD) announced a licensing agreement with Hershey earlier this year, as well as deals to design a Dragon Ball theme park and the first water theme park in Saudi Arabia. The stock was down about 40% year to date in mid-March but has mostly recovered since then. The S&P 500 is up almost 16% since the start of the year. Note that the stock has no analyst coverage or consensus price target. It began trading on the Nasdaq last October.

Mastercraft Boat

• Buyer(s): 10% owner Coliseum Capital Management
• Total shares: almost 191,200
• Price per share: $19.50 to $20.31
• Total cost: around $3.8 million

After recently picking up more than $1.7 million worth of Mastercraft Boat Holdings Inc. (NASDAQ: MCFT), this beneficial owner has returned to the buy window. The Tennessee-based recreational boat maker recently posted fiscal third-quarter results that surpassed projections. And a new chief executive took up the reins back in March. Since the beginning of the year, the stock is down over 13%. The $22.50 consensus price target is less than the 52-week high, but it is 15% or so higher than the current share price. Analysts on average recommend buying shares.

Greenwich LifeSciences

• Buyer(s): CEO Snehal Patel
• Total shares: more than 174,800
• Price per share: $14.30
• Total cost: nearly $2.5 million

This purchase was an announced private placement in accordance with the Securities Act of 1933. Patel is also a 10% owner of Greenwich LifeSciences Inc. (NASDAQ: GLSI) with a stake of more than 5.5 million shares. He and other insiders are under a lockup that prevents them from selling shares. Greenwich last month posted first-quarter earnings that were better than expected. The share price is about 17% higher than on the date of that report and up more than 45% year to date. Just one analyst has a price target, and that $36 target suggests the stock will more than double in the coming year.

Also see 10 Life Lessons From Warren Buffett Everyone in Their 20s Should Hear.

And Other Insider Buying

In the past week or so, some insider buying was reported at Biohaven, Consolidated Edison, Denny’s, Fresh Del Monte Produce, Exxon Mobil, Franklin Resources, Illinois Tool Works, Lemonade, Lions Gate Entertainment, Matador Resources, Motorcar Parts of America, Norfolk Southern, and Rocket Companies as well.

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