- Insiders continue to snap up seeming bargains, even as the markets perk up.
- Three biotech companies saw notable insider purchases recently.
- Strong insider buying is often considered a positive sign for investors, particularly during volatile periods.
While things may be starting to look up for the markets overall, it hasn't stopped insiders from taking advantage of seeming bargains to bolster their positions. This is even true in industries that have had a rough time of late, such as biotechnology. It is further sign that there are some who are not panicking.
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. Companies as diverse as Aircastle, Gluu Mobile and Prospect Capital have seen insiders return to the buy window in a big way, but here the focus is on three biotech companies.
On Leap Day, a director scooped up a 100,000-share block of Intra-Cellular Therapies Inc (NASDAQ: ITCI) at a share price of $29.70. That cost him a more than $2.97 million. The transaction came in the wake of a mixed quarterly report with better-than-expected earnings.
The market cap of this biopharma company focused on disorders within the central nervous system is about $1.2 billion. The share price is down about 45 percent since the beginning of the year to the close at $29.82 on Tuesday. The Nasdaq was down less than 7 percent in that time.
The chairman continues to buy batches of shares periodically, as he has done for well more than a year. In the final week of February he added another 39,800 Opko Health Inc. (NYSE: OPK) shares at prices between $8.70 and $9.27. That cost him more than $355,000 and brought his stake to nearly 159.14 million shares.
This Miami-based healthcare company has a market cap near $5.1 billion, and it also just posted a positive earnings surprise. Note that short interest is more than 20 percent of the total float. Shares closed most recently at $9.35, down about 7 percent year-to-date.
A director added more than 314,000 shares to his stake in this biotech company. At between $28.99 and $30.13 per share, the total for the purchases came to about $9.29 million. Around the time of these buys, Seattle Genetics initiated two Phase 1 trials for patients with B-cell non-Hodgkin lymphoma and with untreated myelodysplastic syndrome.
Seattle Genetics, Inc. (NASDAQ: SGEN) has a $4.4 million market cap. The stock closed Tuesday at $31.95 a share, after an 8 percent pop in the past week, so the timing of the buys looks good. Since the first of the year, however, shares are still down almost 29 percent.
At the time of this writing, the author had no position in the mentioned equities.
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