24/7 Wall St. Insights
- The past week brought some huge insider share purchases.
- Some of these insiders were repeat buyers, and some struggling companies received support.
- Also: 2 Dividend Legends to Hold Forever.
The race to the end of the year is on, and investors are reconsidering their portfolios. The past week brought some notable insider purchases, including return visits from Mexican billionaire Carlos Slim, chief executives, founders, and more. A struggling cosmetics giant and an asset manager received some of that love. Let’s take a quick look at these transactions.
Is Insider Buying Important?
What does insider buying tell us?
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 has wound down, so fewer insiders are 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.
Estee Lauder
An insider buy of a struggling company.
- Buyer(s): a director
- Total shares: 230,800
- Price per share: $63.51 to $65.92
- Total cost: almost $14.9 million
After picking up $10 million worth of Estee Lauder Companies Inc. (NYSE: EL | EL Price Prediction) stock in the prior week, this buyer returned to further boost his stake to almost 388,000 shares. This came in the wake of a management shakeup and a slashed dividend. The cosmetics giant’s stock is down about 55% since the start of the year and is trading near a 10-year low. Few of the 30 analysts who cover the stock recommend buying shares. However, their consensus price target of $80.48 suggests more than 23% upside in the coming 12 months. Note though that it may be skewed by an unusually high $162 price objective from one of those analysts.
Prospect Capital
The chief executive is an insider buyer.
- Buyer(s): CEO John Barry and another officer
- Total shares: around 3.0 million
- Price per share: $4.37 to $4.63
- Total cost: over $13.7 billion
Prospect Capital Corp. (NASDAQ: PSEC) also recently cut its dividend, the first cut since 2017. Shares of the New York-based business development company tumbled 19% or so afterward and are more than 20% lower than a year ago. However, shares were last seen changing hands for more than the purchase price range above. The only posted price target is lower than that, though, and that Wells Fargo analyst has an Underweight rating on the stock. That rating appears to have been unchanged in two years. The share price was near $9 back then.
PBF Energy
A beneficial owner and return buyer.
- Buyer(s): 10% owner Control Empresarial de Capitales
- Total shares: 250,000
- Price per share: $31.19 to $31.50
- Total cost: more than $7.8 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 26.7 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 $32.00, which is near the current share price. Only one of the 15 analysts who follow the stock recommend acquiring shares.
Lions Gate Entertainment
An insider buying shares for the past six months.
- Buyer(s): 10% owner Liberty 77 Capital
- Total shares: over 1.1 million
- Price per share: $6.54 to $7.50
- Total cost: almost $7.7 million
This same buyer has been scooping up Lions Gate Entertainment Corp. (NYSE: LGF-A) shares since last 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, and the most recent report was disappointing as well. The share price is about 15% lower than a year ago, but it was last seen above the buyer’s latest purchase price range. Analysts anticipate over 33% upside in the coming year to their consensus price target of $10.42. Note that the highest price target recently dropped to $13.
Cartesian Therapeutics
Insider buying in biotech continues.
- Buyer(s): a director
- Total shares: more than 431,900
- Price per share: $15.65 to $18.50
- Total cost: almost $7.4 million
Cartesian Therapeutics Inc. (NASDAQ: RNAC) is a clinical-stage biotechnology company that provides cell therapies for the treatment of autoimmune diseases. Yale University revealed that it purchased 100,000 shares in the third quarter and that makes up about two-thirds of its portfolio. Shares are trading for about the same price as at the end of the third quarter, which is within the purchase price range above. Analysts see plenty of room to run in the next 52 weeks, as their consensus price target is up at $40.25. All but one of the six analysts who cover the stock recommend buying shares. That has been so for at least three months.
Oscar Health
A repeat buyer coming back for more.
- Buyer(s): co-founder Joshua Kushner
- Total shares: over 344,500
- Price per share: $14.87 to $16.00
- Total cost: more than $5.4 million
After scooping up over $14 million last week, this buyer stepped up to the buy window again. Oscar Health Inc. (NYSE: OSCR) is a New York-based health insurer. Its third-quarter report showed robust revenue growth and that it is on the road to profitability. The share price is up about 106% from a year ago, handily outperforming the broader markets, and was last seen above the purchase price range. Analysts see over 26% further upside in the coming year to their consensus price target of $20.58. Four out of six analysts who cover the stock recommend buying shares. Note that Kushner’s stake is up to over 6.1 million shares, making him a beneficial owner.
And Other Insider Buying
Some smaller insider buys at Advance Auto Parts, Bank of America, Kellogg, and more.
In the past week, some insider buying was reported at Advance Auto Parts, Archer Aviation, Array Technologies, Bank of America, Dentsply, Enphase Energy, Grocery Outlet, Heartland Express, Liberty Latin America, Nerdy, Pebblebrook Hotel Trust, Reynolds Consumer Products, State Street, Tilray Brands, W.K. Kellogg, and Wolfspeed as well.
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