Despite (or perhaps because of) the volatility in the stock market and uncertainty about the economy, insiders are still scooping up shares of certain stocks. Among the most notable insider purchases recently were in energy companies, an apparel retailer, and a biopharmaceutical firm.
24/7 Wall St. Key Points:
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Officers, 10% owners, and other insiders have shelled out more than $10 million on each of these four biotech stocks in the past week.
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Wall Street expectations for these stocks are huge for the coming year.
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Beneficial owner Carl Icahn was one of those buyers. The founders of a company that had an awful initial public offering showed some love for their company. And the latest in an uptrend of insiders building stakes in biotechs has occurred. 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 is all but over, so few 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.
Venture Global
- Buyer(s): founders Robert Pender and Michael Sabel, as well as a director
- Total shares: over 1.9 million
- Price per share: $9.37 to $10.94
- Total cost: about $19.5 million
When Arlington, Va.-based Venture Global Inc. (NYSE: VG) went public back in January, it did not go well. For the IPO, shares priced at $25 apiece. Yet, they pulled back afterward to below $9. In the past week, the stock has recovered about 10% and were last seen trading within the purchase price range above.
Analysts have a mean price target of $15.21 a share for this oil and gas midstream company. That would be a gain of 52.4% in the next 52 weeks. They have a cautious Buy recommendation. Goldman Sachs maintained its Buy recommendation, while Citigroup reiterated a Neutral rating.
Note that Pender, who is executive board chair, and Sabel, who is chief executive, each tripled their stakes to almost 951,400 shares.
Victoria’s Secret
- Buyer(s): 10% owner BBRC International
- Total shares: more than 1.0 million
- Price per share: $16.18 to $18.55
- Total cost: over $17.3 million
Victoria’s Secret & Co. (NYSE: VSCO) recently posted solid fourth-quarter results but warned of near-term headwinds. The stock has trended downward since the beginning of the year, and this buyer boosted its stake to over 9 million shares.
This Ohio-based apparel retailer named a new chief financial officer back in January. Wall Street remains optimistic about the stock, given the consensus price target of $27.68. That represents 53.8% upside in the next 12 months. However, only three out of 11 analysts who cover the stock recommend buying shares. Goldman Sachs just maintained its Sell rating.
CVR Energy
- Buyer(s): 10% owner Carl Icahn
- Total shares: more than 295,200
- Price per share: $18.01 to $18.15
- Total cost: over $5.3 million
This renowned American financier and investor has been on a buying spree this month and so far has a CVR Energy Inc. (NYSE: CVI) stake of almost 68.5 million shares.
This Texas-based refiner reported a smaller-than-expected net loss for the fourth quarter. Revenue exceeded Wall Street estimates as well. The share price rose afterward but has since given up that gain. Still, the stock was last seen trading for more than the purchase price range above. Analysts anticipate upside of 8.8% in the next year to their consensus target price of $19.83. But none of them recommend buying shares.
Note that Icahn also just acquired more than 850,000 shares of fertilizer maker CVR Partners L.P. (NYSE: UAN).
Zymeworks
- Buyer(s): 10% owner EcoR1 Capital
- Total shares: almost 1.1 million
- Price per share: $11.11 to $12.55
- Total cost: more than $13.1 million
Insider buying in biotechs has been active lately, and this buyer returned to the buy window after picking up about 534,200 Zymeworks BC Inc. (NASDAQ: ZYME) shares back in January.
When this biopharmaceutical company posted its most recent quarterly results, it fell short on the bottom line. Revenue rose year over year, and the stock reversed its recent slide afterward. Here too, shares are changing hands for more than the purchase price range above.
The $20.75 consensus price target signals more than 62% upside in the coming year. Analysts on average recommend buying shares, and they have since at least the beginning of this year. Citigroup recently maintained its Buy rating, while H.C. Wainwright reiterated a Neutral rating.
And Other Insider Buying
In the past week or so, some insider buying was also reported at:
- Advance Auto Parts Inc. (NYSE: AAP) by directors for $555,100
- American Express Co. (NYSE: AXP) by a director for $998,600
- Best Buy Co. Inc. (NYSE: BBY) by the CEO for $984,400
- Caesars Entertainment Inc. (NASDAQ: CZR) by a director for $108,000
- J.M. Smucker Co. (NYSE: SJM) by a director for $100,500
- Marathon Petroleum Corp. (NYSE: MPC) by an officer for $269,400
- PG&E Corp. (NYSE: PCG) by a director for $100,500
- Southwest Airlines Co. (NYSE: LUV) by a director for $3,700
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