- Insider buying can be an encouraging signal for potential investors.
- Some insiders were picking up shares in the wake of recent quarterly results.
- A REIT, a regional bank and a Chinese internet provider saw notable insider purchases reported in the past week
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. So insider buying can be an encouraging signal for potential investors, particularly during periods of uncertainty.
Here's a look at some notable insider purchases reported in the past week.
A director of DDR Corp DDR has been buying shares of this shopping center-focused real estate investment trust since February, including this past week's more than 1.9 million shares. At prices that ranged from $7.14 to $7.47 apiece, that cost him around $13.85 million. Note that the latest purchases brought his stake to more than 55.47 million shares out of about 340 million shares outstanding.
DDR reported mixed first-quarter results in the previous week, with the report noting the sale 15 shopping centers. Its shares slipped fractionally in the past week and traded most recently at $7.25, still within the director's purchase price range. The S&P 500 was up about 1 percent last week. Note that the shares have changed hands as high as $10.87 apiece in the past year.
Mohawk Industries, Inc. MHK had a director buy nearly 66,200 shares of this flooring products company early last week. The share prices for these purchases ranged from $208.80 to $209.92, and the total for the transaction was about $13.84 million. The acquisition increased that director's stake to almost 209,000 shares.
The transactions came after Mohawk posted better-than-expected earnings, and at about the same time JPMorgan lowered its price target. The shares rose more than 3 percent this past week and ended at $216.36, so these insider buys seem well-timed. The analysts' mean price target for the shares is $283.21.
At Cullen/Frost Bankers, Inc. CFR, two directors pulled the trigger in the past week, adding a total of about 44,200 shares of this holding company for Texas-based Frost Bank. At share prices that ranged from $114.00 to $116.50, that totaled more than $5.09 million. Note that one of those directors bought only 859 shares, which is his entire reported stake.
The company posted solid quarterly results and boosted its dividend hike ahead of these purchases. The stock closed this past Friday at $115.27 a share, up less than 2 percent for the week and still within the price range of these purchases. The stock has traded as high as $117.53 a share in the past 52 weeks, but the consensus analyst target is up at $118.11.
Sohu.com Inc SOHU saw its CEO Charles Zhang step up to the buy window this past week. The more than 128,900 shares of this Beijing-based internet company acquired, at a per-share price of $30.60 to $31.76, cost him more than $3.98 million. The purchase brought his stake to more than 7.85 million shares.
Shares sank to a multiyear low after Sohu.com posted a bigger-than-expected net loss for the first quarter. Its shares ended the past week's trading with about an 11-percent gain, effectively recovering the post-earnings sell-off. Friday's close was $33.96 a share, handily higher than Zhang's purchase prices. The mean price target is $43.01, and the stock has traded as high as $70.86 a share in the past 52 weeks.
An Alexion Pharmaceuticals, Inc. ALXN director scooped up 10,000 shares of this biopharmaceutical company to end April. At $120.79 per share, the transaction totaled more than $1.20 million. The new total stake was listed as more than 26,300 shares, which compares with a total float of more than 220 million shares.
Alexion posted better-than-expected first-quarter earnings and raised its guidance in the prior week. The shares closed this past week's trading at $116.81 apiece, so that director may have moved on it too soon. The stock is still down almost 6 percent year to date, but the mean price target is up at $159.15.
At the time of this writing, the author had no position in the mentioned equities.
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