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Penske Automotive And Norwegian Cruise Line CEOs Make Big Bets On Their Companies

Penske Automotive And Norwegian Cruise Line CEOs Make Big Bets On Their Companies
  • Racing legend Roger Penske continues to buy shares in his namesake company.
  • A cruise-line CEO also made notable insider purchases in the past week.
  • Shares of one are up sharply, while the other just hit another 52-week low.

Notable among the past week's insider buying was that the chief executive officers (CEOs) at Penske Automotive Group, Inc. (NYSE: PAG) and Norwegian Cruise Line Holdings Ltd (NASDAQ: NCLH) have handily increased their stakes. This came as shares of the auto dealership operator have been reaching new year-to-date highs and the Miami-based cruise line operator was hitting new 52-week lows.

Conventional wisdom says 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, particularly during volatile periods.

Penske Automotive Chairman and CEO Roger Penske scooped up more than 285,000 shares of this Michigan-based transportation services company last week at between $44.60 and $45.38 per share. Those purchases totaled more than $12.86 million, and they continue his streak of buying batches of shares going back at least to July. His stake was more than 33.2 million shares on last look.

This dealer, distributor and lessor of automobiles and trucks reported better than expected quarterly results in August, and it has a market capitalization near $4 billion. It offers a 2.5 percent dividend yield. Short interest is less than 5 percent of the total float. The share price is up almost 20 percent in the past month and closed at $46.36 on Friday. The S&P 500 is only fractionally higher in that same period.

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Also last week, Chairman and CEO Frank Del Rio purchased almost 83,500 shares of Norwegian Cruise Line. At prices between $35.90 and $35.96 per share, that cost him around $3 million. Recent woes at competitor Carnival Corp (NYSE: CCL) have also been a drag on Norwegian, which was recently dropped from Citigroup's U.S. Focus List.

This Bermuda-incorporated cruise line operator has a market cap of about $8 billion, but it does not pay a dividend. Its short interest was less than 5 percent of the float in the most recently reported period. Shares ended last week at $35.61 apiece, so it looks like the buys may have been well timed. The share price is down about 22 percent in the past 90 days, while the S&P 500 is up nearly 4 percent in that time.

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

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