American Apparel, Consolidated Edison and Phillips 66 are among the companies that have seen insider buying recently. Insiders may sell shares for any number of reasons, but conventional wisdom says that insiders really only buy shares of a company for one reason -- they believe the stock price will rise and they want to profit from it.
Pullbacks and sell-offs provide a perfect opportunity for investors who have faith in a company to snap up shares.
Recently, one director and one beneficial owner have picked up more than 38,000 Accelerate Diagnostics (NASDAQ: AXDX) shares combined for a total price of almost $1 million. Note that the same beneficial owner also bought $5 million worth of shares back in May.
This Arizona-based medical research company has a market cap of a little over $1 billion and a return on equity that is in the red. Short interest is more than 10 percent of the total float. Shares have pulled back more than 12 percent from a recent 52-week high. Over the past six months, the stock has outperformed the S&P 500.
Ousted CEO Dov Charney recently scooped up more than 27.3 million shares of American Apparel (NYSE: AAP) as part of his attempt to get the company back. That was worth more than $19.5 million. Hedge fund Standard General is helping Charney, and also bought about 1.5 million shares since.
The market cap is about $9.8 billion. The return on equity is more than 100 percent, but the operating margin is in the red. The share price has swung wildly since Charney's ouster, and over the past six months, the stock has underperformed the likes of Abercrombie & Fitch and Urban Outfitters.
A number of executives, including the CEO and CFO, buy small batches of Consolidated Edison (NYSE: ED) shares at the end of each month. For June, they bought 561 shares all together for a total of more than $31,000. Options trading in the diversified utility heated up in June.
The market capitalization of this New York-based company is more than $16 billion and the dividend yield is about 4.4 percent. The price-to-earnings (P/E) ratio is less than the industry average. Shares retreated less than two percent last week. Over the past six months, the stock has underperformed the S&P 500 and peer American Electric Power.
Ladenburg Thalmann Financial Services
Three Ladenburg Thalmann Financial Services (NYSE: LTS) directors have acquired more than $16.4 million worth of shares in the past two weeks. That was more than 275,000 shares of the stock of this Miami-based company, though the lion's share went to the chairman of Opko Health.
Ladenburg Thalmann has a market cap of more than $600 million. Its long-term EPS growth forecast is about 15 percent. Shares are up more than 13 percent in the past month and are trading near the 52-week high. Over the past six months, the stock has outperformed J.P. Morgan and the broader markets.
The chairman continues to buy batches of shares periodically, as he has done for more than a year. He picked up more than 43,000 Opko Health (NYSE: OPK) shares in the past week, for a total price of more than $380,000. His total stake is around 141.5 million shares.
This Miami-based health care company has a market cap of about $3.7 billion, and short interest is more than 21 percent of its float. Shares are down about three percent in the past month but still up more than six percent year to date. Over the past six months, the stock has narrowly underperformed larger competitors Abbot Labs and Medtronic.
One director bought almost about 3,100 shares of Phillips 66 (NYSE: PSX) at the end of June. That was worth more than $250,000, and it followed a nearly $300,000 buy earlier in the month. Shares pulled back on news of Phillips 66's acquisition of lubricants company Spectrum.
Phillips 66 has a market cap near $46.1 billion and a dividend yield near 2.3 percent. Its return on equity is more than 31 percent. Shares have retreated more than four percent from a recent multiyear high. The stock has outperformed smaller competitors Marathon Petroleum and Valero Energy over the past six months.
At the time of this writing, the author had no position in the mentioned equities.
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