Insider buying can be an encouraging signal for potential investors.
- A couple of chief executive officers made notable purchases of their stock this week.
- Also, one insider bucked the trend in a hot software stock.
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. 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.
Continental Resources, Inc. (NYSE: CLR) saw Harold Hamm, the board chair and chief executive, add to his stake. At prices that ranged from $65 to $65.54, the total of 136,000 shares reportedly acquired in the past week cost Hamm more than $8.88 million. Also note that five insiders sold more than 52,000 shares in May.
Hamm recently told CNBC that he sees oil going to $75 a barrel or more. The stock climbed about 6 percent last week, ending Friday at $68.17, so the purchase appears to be well-timed. The share price hit a 52-week high of $69.91 recently, and the consensus price target is $70.90.
The president and CEO of Liberty Global PLC (NASDAQ: LBTYA) also stepped up to the buy window this past week. Michael Friese picked up 100,000 shares at between $28.73 and $29.01 each, for a total of more than $2.89 million. That brought his stake in this international telecommunications and television company to almost 672,000 shares.
Warren Buffett's Berkshire Hathaway reduced its stake in Liberty Global in the first quarter. The shares ended the past week at $29.41, up more than 2 percent and above the CEO's purchase price range. The S&P 500 was essentially flat in that time. Shares have traded as high as $39.73 in the past year.
Cabot Oil & Gas
At Cabot Oil & Gas Corporation (NYSE: COG), a director purchased 50,000 shares of this independent oil and gas company last week. The share prices for these purchases averaged $22.25, and the total for the transactions came to more than $1.11 million. The total stake was listed as more than 681,700, while total shares outstanding numbered about 449 million.
Cabot posted better-than-expected first-quarter results in late April, but shares have retreated more than 3 percent since then and ended most recently at $23.03. Still, the director's buy seems well-timed. And note that the stock has traded as high as $29.57 in the past 52 weeks.
Cboe Global Markets
Cboe Global Markets Inc (NASDAQ: CBOE) saw its president and chief operating officer make a trip to the buy window this past week. The 10,000 shares of this Chicago-based options exchange operator acquired, at a per-share price of $99.39 to $99.52, cost him more than $994,000. And the purchase brought his stake to more than 152,500 shares.
Early in May, Cboe posted better-than-expected first-quarter results. Its shares have pulled back more than 8 percent in the past month, though. They most recently traded at $98.42, so no quick gain for the COO in this case. Shares have traded as high as $138.54 in the past year, but the mean price target is $113.75.
A salesforce.com, inc. (NYSE: CRM) bucked the trend and scooped up 6,000 shares of this software giant while many other insiders, including CEO Marc Benioff, have been selling. At $131.30 to $132.05 per share, the purchase totaled almost $792,000, and it was pursuant to a 10b5-1 plan.
Last week's earnings report not only pleased investors and analysts alike, but it sent shares to a multiyear high of $132.55. Yet the stock was trading at $130.52 on Friday's close, below the director's purchase price range. The share price is up about 25 percent year to date, and the consensus price target was last seen at $139.22.
At the time of this writing, the author had no position in the mentioned equities.
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