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A Billion-Dollar Private Placement Highlights Recent Insider Buying
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24/7 Wall St. Insights
- Saudi Arabia’s sovereign wealth fund has invested another billion dollars in EV maker Lucid Group Inc. (NASDAQ: LCID).
- Other notable insider buying included more from repeat buyer Mexican billionaire Carlos Slim.
- Also: 2 Dividend Legends to Hold Forever.
In the past week, Saudi Arabia’s sovereign wealth fund invested another billion dollars in a struggling electric vehicle maker. But that is hardly the only notable insider buying seen in the past week or so. Some of the most notable transactions were private placements, and Mexican billionaire Carlos Slim stepped up to further boost a big stake. 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.
The earnings-reporting season continues, so many insiders are still 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.
Lucid
- Buyer(s): 10% owner Public Investment Fund
- Total shares: almost 396,200
- Price per share: $2.59
- Total cost: over $1.0 billion
Lucid Group Inc. (NASDAQ: LCID) said it intends to use the proceeds from this private placement for general corporate purposes, including capital expenditures and working capital. The electric vehicle maker has released its Gravity SUV. Meanwhile, the share price has retreated 38% or so in the past couple of months and was last seen about 19% lower than the buyer’s share price. However, analysts anticipate over 50% upside in the coming year to their mean price target of $3.26. Yet, none of the 16 analysts who cover the stock recommend buying shares. Note that the Public Investment Fund is Saudi Arabia’s sovereign wealth fund, and it bought $1.8 billion worth of shares back in June, when the price was closer to $7 per share.
AllianceBernstein
- Buyer(s): shareholder Equitable Holdings
- Total shares: 700,000
- Price per share: $35.12
- Total cost: almost $24.6 million
Though just reported, this transaction occurred back in September. Its AllianceBernstein Holding L.P. (NYSE: AB) stake is up to more than 3.7 million shares. Since then, the stock has reached a 52-week high of $38.96, and the Nashville-based investment firm posted strong quarterly results. Shares now are changing hands for around $38, and the $42.33 consensus price target indicates there is 12% or so upside in the next 12 months. Half of the six analysts who follow the stock recommend buying shares, two of them with Strong Buy ratings.
Jeld-Wen
- Buyer(s): 10% owner Turtle Creek Asset Management
- Total shares: 1.0 million
- Price per share: $9.55 to $10.95
- Total cost: more than $10.3 million
Window and door maker Jeld-Wen Holding Inc. (NYSE: JELD) just released disappointing third-quarter results, and shares fell to a 52-week low of $8.90 afterward. They are now down about 43% since the beginning of the year, but still within the buyer’s purchase price range. Analysts have a mean price target of $12.70, which represents more than 18% upside potential in the coming year. The consensus recommendation is to buy shares. Note that the stake of the buyer above is up to almost $12 million.
Cadiz
- Buyer(s): 10% owner Heerema International Group Services
- Total shares: less than 2.1 million
- Price per share: $3.34
- Total cost: around $6.9 million
This was another private placement, and Los Angeles-based water resource development company Cadiz Inc. (NASDAQ: CDZI) said it intends to use the proceeds to advance development of its water supply and groundwater banking project. The company has named new chief executive and chief operating officers this year. The stock is up about 31% since the beginning of the year. Shares were last seen trading for more than the buyer’s purchase price. The one analyst who covers the stock has a Buy rating and a $15 price target. Note that the buyer’s stake is almost 22.8 million shares.
PBF Energy
- Buyer(s): 10% owner Control Empresarial de Capitales
- Total shares: 235,000
- Price per share: $28.30 to $28.48
- Total cost: around $6.7 million
This Carlos Slim-controlled investment firm has been scooping up shares of PBF Energy Inc. (NYSE: PBF) since early June. Now its stake is up to nearly 26.2 million shares. The New Jersey-based refiner recently posted mixed quarterly results and hiked its dividend. The stock has been in retreat since early April, recently hit a new 52-week low, but was last seen above the buyer’s latest purchase price range. Analysts have a mean price target of $31.75, which would be a gain of over 5% from the current share price. Only six of the 17 analysts who follow the stock recommend acquiring shares.
Bright Minds Biosciences
- Buyer(s): 10% Cormorant Asset Management
- Total shares: more than 184,300
- Price per share: $21.70
- Total cost: nearly $4.0 million
This past summer, Bright Minds Biosciences Inc. (NASDAQ: DRUG) posted positive trial results, and it had a five-for-one reverse stock split to remain in compliance with Nasdaq listing rules. The transaction above is part of a private placement, and the company intends to use the proceeds for research and development related to its drug development programs and general working capital. Note that the stock has little to no analyst coverage.
And Other Insider Buying
In the past week, some insider buying was reported at Atlas Energy, Blackstone, Bristol-Myers Squibb, Clear Channel Outdoor, Genuine Parts, Herbalife, HF Sinclair, Huntington Ingalls Industries, Intel, Kinder Morgan, Markel, Mobileye, Norwegian Cruise Line, Palladyne AI, Red Robin Gourmet Burgers, Reynolds Consumer Products, Sturm Ruger, Universal Display as well.
Stock Splits Matter and Here’s What’s Coming Next
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