- Insider buying can be an encouraging signal for potential investors.
- Some beneficial owners made notable purchases of shares last week.
- Insider buys at one company coincide with the selection of a new financial officer.
Conventional wisdom says that insiders and 10-percent owners 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 buys 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.
Sprint Corp (NYSE: S) saw beneficial owner Softbank scoop up another 4.30 million or so shares of this second-tier telecom at prices that averaged $5.96 each, for a total of more than $25.6 million. Note that this was a continuation of Softbank's share-buying throughout December.
Sprint just named a new chief financial officer, Michael Combes, the former CEO of Altice. On last look the share price at Sprint was at $5.80, a level that's down a bit from Softbank's most recent insider purchase prices, as well as less than 2-percent lower year to date.
Cheniere Energy Partners LP (NYSE: CQP) saw two beneficial owners, Blackstone CQP Common Holdco and GSO Holdings, purchased more than 919,600 shares of this natural gas-focused firm at between $29.49 and $29.63 apiece for a total of more than $27.2 million. This too was a continuation of December buys made by these two 10-percent owners.
Stifel recently initiated coverage on the stock but with a Hold rating. The shares closed most recently at $29.70, still near the purchase price and essentially flat year-to-date.
The Biglari Holdings Inc (NYSE: BH) founder and CEO, Sardar Biglari, acquired more than 3.200 shares of restaurant chain operator this past week. At between $416.95 and $419.32 a share, that cost him more than $738,000. Note that Biglari is a frequent buyer of small batches of shares, and his most recent stake is listed as being more than 684,000 shares.
Before the end of the year, the owner of Steak 'n Shake and Maxim magazine announced plans to become a dual-class stock with A shares and B shares. The stock closed most recently at $417.98, which is in the range of Biglari's latest purchase prices. It is also fractionally lower year-to-date.
At Compass Diversified Holdings (NYSE: CODI), six insiders altogether bought more than 29,200 shares of this private equity firm. At a share price of $17.24, those purchases totaled around $503,000. The transactions occurred about the same time as the company announced its quarterly distributions for common and preferred shares.
Shares of this Westport, Connecticut-based company have traded mostly between $16 and $19 in the past 18 months. The stock ended last week at $17.40 per share, up about 2 percent for the week, so the purchases appear to be well timed.
At the time of this writing, the author had no position in the mentioned equities.
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