- Insider buying can be an encouraging signal for potential investors.
- Two chief executive officers have made notable insider buys since Christmas.
- The purchases at one of those companies totaled more than $12 million.
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. So insider buying can be an encouraging signal for potential investors, particularly in an overpriced market or after disappointing news.
Here's a look at some notable insider purchases reported in the past week.
Prospect Capital Corporation (NASDAQ: PSEC) CEO John Barry and COO Grier Eliasek together bought a total of more than 1.69 million shares of this business development company at prices that ranged from $7.08 to $7.21 apiece, for a total of more than $12.1 million. Note that these two executives have been frequently buying batches of shares since mid-November.
In November, the New York-based company reported fiscal first-quarter results that fell short of expectations. On last look the share price was near $6.75, handily below the most recent insider purchase prices.
An Omega Healthcare Investors Inc (NYSE: OHI) director picked up 100,000 shares of this real estate investment firm at $26.89 apiece, for a total of almost $6.7 million. That brought that director's stake to a little less than 1 million shares, and note that another director bought a batch of 10,000 shares in early November."
At Reata Pharmaceuticals Inc (NYSE: RETA), two directors and a beneficial owner altogether bought more than 81,000 shares last week of this biopharmaceutical company. At prices that ranged from $25.83 to $26.10, that totaled more than $2.1 million. This followed on after other purchases by the same three earlier in the month.
Shares of this Irving, Texas-based company have popped more than 9 percent since it announced positive interim clinical data earlier this month. The stock ended last week above $28.00 per share, so here too the purchases appear to be well timed.
Biglari Holdings Inc (NYSE: BH) saw founder and CEO Sardar Biglari acquire more than 2,500 shares of restaurant chain operator since Christmas. At between $418.43 and $419.25 a share, that cost him less than $1.1 million. Note that Biglari is a frequent buyer of small batches of shares, and his most recent stake is listed as less than 680,000 shares.
The owner of Steak and Shake and Maxim magazine recently announced plans to become a dual-class stock with A shares and B shares. The stock closed most recently near $414, which is less than Biglari's latest purchase prices.
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