An Airline, Biotechs, and More See Huge Insider Buying

Investing

Published: October 6, 2024 9:45 am

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Public offerings of stock and activist investor activity have prompted some huge insider buying.
An entertainment company and an airline joined biotech and energy companies as targets last week.
Also: 2 Dividend Legends to Hold Forever.

Public offerings of stock and activist investor activity brought out some huge insider buying in the past week or so. And again, biotech and energy industries were well represented among the notable purchases, in addition to an entertainment company and an airline. Buyers included beneficial owners, top executives, and others. Let’s take a quick look at these transactions.

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 earnings-reporting season ramps up again, 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.

TKO

Buyer(s): 10% owner Silver Lake West HoldCo
Total shares: more than 1.6 million
Price per share: $89.1
Total cost: over $146.2 million

TKO Group Holdings Inc. (NYSE: TKO) is the parent of Ultimate Fighting Championship and World Wrestling Entertainment. It raised its full-year guidance when it released its latest quarterly results. Since that report, the stock is up more than 6% and trading near a multiyear high. The consensus price target is up at $132.25, and all but three out of 16 analysts recommend buying shares, five of them with Strong Buy ratings. Note that, though reported this past week, the transaction actually occurred back in April.

Southwest Airlines

Buyer(s): Executive Chair Gary Kelly and another director
Total shares: over 3.6 million
Price per share: $29.05 to $30.00
Total cost: around $107.7 million

Kelly picked up less than 34,000 of those shares. The rest were acquired by a director in reaction to pressure from activist investor Elliott Management for leadership changes at Southwest Airlines Co. (NYSE: LUV). The stock was last seen trading above the buyers’ purchase price range and is around 8% higher than six months ago. Analysts have a mean price target of just $26.94, which means that they don’t currently see any upside in the next 52 weeks. Things may change once things shake out with Elliott.

New Fortress Energy

Buyer(s): CEO Wesley Edens
Total shares: Almost 5.8 million
Price per share: $8.63
Total cost: about $50.0 million

Edens took advantage of a public offering of New Fortress Energy Inc. (NASDAQ: NFE) shares. The energy infrastructure company posted disappointing quarterly results back in August. After the report, the stock tumbled to a multiyear low of $8.20 but shares were last seen changing hands well above the buyer’s purchase price. The consensus price target is up at $19.07, which would be a gain of about 107%. Analysts on average recommend buying shares, though Morgan Stanley just downgraded the stock to Equal Weight. Note that Edens is a beneficial owner with a stake of more than 35 million shares.

BioAge Labs

Acquiring shares in an initial public offering.

Buyer(s): former 10% owner Cormorant Asset Management and a director
Total shares: around 669,200
Price per share: $18.00 to $20.00
Total cost: over $12.4 million

This beneficial owner bought into the initial public offering of BioAge Labs Inc. (NASDAQ: BIOA) stock. The California-based clinical-stage biopharmaceutical company is focused on obesity and other metabolic diseases. Shares have traded as high as $24 so far. Cormorant picked up 450,000 of the shares and has a stake of over 1.6 million shares. The health-care-focused investment firm also purchased shares of Corbus Pharmaceuticals Holdings Inc. (NASDAQ: CRBP) in the prior week. Furthermore, other biotech IPOs tempted insiders recently.

Wave Life Sciences

A pharmaceutical giant with a big stake.

Buyer(s): 10% owner GSK
Total shares: nearly 2.8 million
Price per share: $8.00
Total cost: more than $22.3 million

This pharmaceutical giant picked up Wave Life Sciences Lt. (NASDAQ: WVE) shares in a public offering. The Singapore-based clinical-stage biotechnology company recently reported encouraging interim data on a muscular disorder treatment and received an FDA pediatric designation for its Duchenne muscular dystrophy treatment. The share price is 60% or so higher than 90 days ago, as well as about up 7% from the buyer’s purchase price. The mean price target is up at $15.78, and all six analysts following the stock recommend buying shares. GSK’s stake is up to more than 16 million shares.

Talos Energy

Buyer(s): 10% owner Control Empresarial de Capitales
Total shares: 686,700
Price per share: $10.03 to $10.55
Total cost: almost $7.1 million

This Carlos Slim-controlled investment firm has been scooping up shares of Talos Energy Inc. (NYSE: TALO) since March. The stake is now up to about 43.5 million shares. The Houston-based oil and gas company recently reported a big discovery in the Gulf of Mexico but also saw the departure of its chief executive. The share price is above the latest purchase price range but less than 6% lower than six months ago. However, analysts anticipate that the stock will rise to $17.83 a share in the next 12 months, which would be a gain of over 60%. Their consensus recommendation is to buy shares.

And Other Insider Buying

In the past week, some insider buying was reported at AIG, Atlanta Braves, Autodesk, Biohaven, Green Dot, Hecla Mining, Lions Gate Entertainment, PBF Energy, SAIC, Saul Centers, Simon Property Group, and Voya Financial.

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