24/7 Wall St. Insights
- Warren Buffett recently boosted his stake in the newly independent Sirius XM Holdings Inc. (NASDAQ: SIRI).
- Biotech initial public offerings in the past week also prompted some huge insider buying.
- Also: 2 Dividend Legends to Hold Forever.
The third-quarter earnings reporting season has begun, which usually means a slowdown in insider buying. However, beneficial owner Berkshire Hathaway Inc. (NYSE: BRK-B) recently boosted its stake in Warren Buffett’s favorite media stock, and biotech initial public offerings in the past week also prompted some huge insider buying. Elsewhere, a repeat buyer came back for more shares of an entertainment giant. 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.
As mentioned, a new earnings-reporting season has begun, so 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.
Sirius XM
- Buyer(s): 10% owner Berkshire Hathaway
- Total shares: more than 3.5 million
- Price per share: $22.96 to $25.14
- Total cost: over $86.7 million
Berkshire Hathaway’s Sirius XM Holdings Inc. (NASDAQ: SIRI) stake is up to 32%. That is almost 109 million shares. The company recently completed its spin-off from Liberty Media. The stock pulled back about 15% afterward but has since recovered. Its share price is still more than 12% lower than three months ago. The $30.46 consensus price target signals more than 12% upside in the coming year, but price target adjustments following the impending earnings report could change that. For now, only eight out of 18 analysts recommend buying shares.
Gabelli Dividend & Income Trust
- Buyer(s): Mario Gabelli and two other directors
- Total shares: over 5.6 million
- Price per share: $10.00 to $24.90
- Total cost: almost $56.4 million
Gabelli, CEO of Gabelli Asset Management, purchased most of these shares. Gabelli Dividend & Income Trust (NYSE: GDV) is a closed-ended equity mutual fund launched by GAMCO Investors that seeks to invest primarily in dividend-paying stocks of companies operating across diversified sectors. The share price is up more than 16% in the past six months, outperforming the S&P 500. However, it has underperformed the broader markets in the past five years. Note that the fund has paid a dividend of $0.11 in almost every month since the beginning of 2016.
CAMP4 Therapeutics
- Buyer(s): five 10% owners
- Total shares: almost 5.7 million
- Price per share: $11
- Total cost: nearly $51.4 million
These buyers took advantage of the clinical-stage biopharmaceutical company’s initial public offering, which raised $75 million. Cambridge, Massachusetts-based CAMP4 Therapeutics Corp. (NASDAQ: CAMP), which is backed by health care giant Kaiser Permanente, is developing a pipeline of regulatory RNA-targeting therapeutics to treat various genetic diseases. Note that some of these buyers also recently bought into the IPOs of Artiva Biotherapeutics Inc. (NASDAQ: ARTV) and Zenas BioPharma Inc. (NASDAQ: ZBIO).
Upstream Bio
- Buyer(s): two 10% owners
- Total shares: 2.0 million
- Price per share: $17.00
- Total cost: $34.0 million
Upstream Bio Inc. (NASDAQ: UPB) also had an IPO and raised $293 million. The clinical-stage biotechnology company develops treatments for inflammatory diseases, with an initial focus on severe respiratory disorders. So far, the shares have changed hands for between $20.74 and $24.84 apiece. Note that one of these buyers, OrbiMed Advisors, also recently picked up shares of biotechs MBX Biosciences Inc. (NASDAQ: MBX) and scPharmaceuticals Inc. (NASDAQ: SCPH).
Ceribell
- Buyer(s): 10% owner TPG GP A and a director
- Total shares: about 616,500
- Price per share: $17.00
- Total cost: nearly $10.5 million
And these purchases were also part of another IPO. Commercial-stage medical technology company Ceribell Inc. (NASDAQ: CBLL) is based in Silicon Valley. New clinical evidence has shown that its AI-powered point-of-care electroencephalography (EEG) results in shorter hospital stays than conventional EEGs. Thus far, the stock has traded for $23.00 to $26.94 per share. Note that the company was formerly known as Brain Stethoscope Inc.
Lions Gate Entertainment
- Buyer(s): 10% owner Liberty 77 Capital
- Total shares: more than 816,400
- Price per share: $6.70 to $6.75
- Total cost: almost $5.5 million
This same buyer has been scooping up Lions Gate Entertainment Corp. (NYSE: LGF-A) shares since June. When the entertainment giant reported its fiscal first-quarter results in August, they fell short of expectations on both the top and bottom lines. Since the report, the share price is about 13% lower, but it is handily above the buyer’s latest purchase price range. Analysts anticipate over 53% upside in the coming year to their consensus price target of $11.62. Note that the highest price target is up at $15.
And Other Insider Buying
In the past week, some insider buying was reported at Atlanta Braves, Bath & Body Works, Delek Logistics Partners, Energy Fuels, Marvell Technology, Neogen, Pineapple Energy, Red Robin Gourmet Burgers, Sonida Senior Living, and Worthington Enterprises as well.
Stock Splits Do Matter and Here’s What’s Coming Next
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