Insiders Cannot Get Enough Of Endurance International And Opko Health
- A cloud services provider and a biotech company have seen a lot of insider buying lately.
- Share prices of both of them are handily higher in the past month.
- But one is closer to a 52-week low and the other to its 52-week high.
Insider buying can be an encouraging signal for potential investors, particularly during volatile periods. So, what are investors to make of it when insiders just keep lining up to buy more shares of their companies? That has been the case lately with Endurance International Group Hldgs Inc (NASDAQ: EIGI) and Opko Health Inc. (NASDAQ: OPK).
Shares of both have risen by double-digit percentages in the past month. But, note that the web hosting and could services company is still trading closer to its 52-week low, while the pharmaceutical and diagnostics company is near its 52-week high.
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.
A number of directors have been purchasing Endurance International shares since the beginning of August. So far this week, five of them have scooped up 31,000 shares at $8.48 per share. Those purchases totaled more than $262,800. Note that this was the smallest batch of shares since this buying began. Individual directors were buying batches of well more than a million shares earlier this month.
Also note that one of those directors is Warburg Pincus Private Equity, which now has a stake of more than 27 percent. Endurance International has a market capitalization of more than $1 billion. It offers no dividend. Short interest is more than 8 percent of the float. The share price hit a multiyear low of $6.55 in early August, when the buying began, but it closed most recently at $9.00. The S&P 500 was relatively flat in that time.
For well more than a year, Chairman and CEO Phillip Frost of Opko Health frequently has been buying shares. So far this month, he has acquired more than 46,200 shares of the Miami-based company. At share prices ranging from $9.28 to $11.16, that cost him more than $460,000. At last look, his stake was well over 160 million shares.
Results from a Phase 3 study of Opko Health's long-lasting human growth hormone are expected before the end of the year. The current market cap is more than $6 billion, though it does not pay out a dividend either. Its short interest was more than 21 percent of the float in the most recently reported period. The most recent closing price was $11.19, above all of Frost's per-share buy-in prices this month. The stock's 52-week high is $11.85.
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Disclosure: At the time of this writing, the author had no position in the mentioned equities.
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