Market Overview

GE And Other Companies In Transition That Insiders Are Buying

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GE And Other Companies In Transition That Insiders Are Buying
  • Insiders continue to snap up seeming bargains, even with the markets approaching highs.
  • Three companies in transition saw notable insider purchases recently.
  • Strong insider buying is often considered a positive sign for investors, particularly during volatile periods.

Turnaround efforts at a company can bring both challenges and opportunities for insiders. Top level executives and directors lately have taken advantage of recent or ongoing changes to increase their stakes in General Electric Company (NYSE: GE), Baxter International Inc (NYSE: BAX) and Advance Auto Parts, Inc. (NYSE: AAP).

Conventional wisdom says that insiders and 10 percent owners really only buy shares of a company for one reason — they believe the stock price will rise and they want to profit from it. Insider buying can be an encouraging signal for potential investors. Companies as diverse as cigarette maker Altria, fertilizer giant CF Industries and retailer Target lately have seen insiders come to the buy window in a big way, but here we focus on three companies that have been undergoing big changes.

General Electric

CEO Jeffrey Immelt recently scooped up a more than 67,600 shares of this iconic conglomerate giant at $29.59 per share. That cost him around $2.0 million. GE has been reducing and eliminating its financial businesses to be more focused as an industrial company, and it is still cutting costs to offset its exposure to energy sector woes.

This global company has a market cap of about $277 billion, and its dividend yield is about 3.0 percent. The share price is up almost 10 percent since the low back in February to the most recent close of $30.12, but the Dow Jones Industrial Average is more than 14 percent higher in that time.

Related Link: Short Interest In Abbott Labs And Baxter International Doubles

Baxter International

The chief executive officer purchased almost 11,700 shares of this renal and hospital products maker recently. At a share price of $42.75, that transaction totaled just shy of $500,000. The company spun off its biotech business, Baxalta, last year. More recently it is reported to eyeing an acquisition of Indian drugmaker Gland Pharma.

This Illinois-based health care company has a market cap near $24 billion and a dividend yield of about 1.2 percent. Note that short sellers have been all over this stock; 22 percent of the float is short. The stock closed most recently at $43.41 per share, up more than 13 percent year-to-date.

Advance Auto Parts

A director last week added 150,000 shares to his stake in this specialty retailer. At $152.73 per share, that cost him nearly $22.91 million. The recent departure of the chief financial officer is part of a larger management shakeup prompted in part by the efforts of activist hedge fund Starboard Value.

Advance Auto Parts has a more than $11 million market cap. It also offers a 0.1 percent dividend yield. The stock ended last week at $156.31 a share, so the buy appears well timed. The share price is up more than 7 percent in the past week, but still less than 4 percent higher year-to-date.

Disclosure: At the time of this writing, the author had no position in the mentioned equities.

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Posted-In: altria Baxalta CF Industries Gland Pharma Jeffrey ImmeltNews Insider Trades Trading Ideas Best of Benzinga

 

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