- Insider buying can be an encouraging signal for potential investors.
- Some insiders took advantage of shares near multiyear lows this past week.
- Shares of two of these companies were bought by their CEOs.
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 during periods of uncertainty.
Here's a look at a few notable insider purchases reported in the past week.
Chesapeake Energy Corporation (NYSE: CHK) saw Chief Executive Officer Robert Lawler, Chief Financial Officer Domenic J. Dell'Osso Jr. and two other insiders add to their stakes this past week. At per-share prices of $1.85 to $2.23, the more than 2.63 million shares reportedly acquired cost them about $5.50 million. Another director also purchased 135,000 shares earlier this month.
Shares have retreated since JPMorgan downgraded the stock earlier this month. It ended last week at $1.90 per share, up from the previous day's multiyear low of $1.81. Shares have traded as high as $5.60 in the past year, but the consensus price target was at $3.69 on last look.
The new The Medicines Company (NASDAQ: MDCO) CEO, Mark Timney, and two other insiders altogether added more than 180,000 shares of this biopharmaceutical company to their stakes this past week. The share prices for these purchases ranged from $17.56 to $19.17, and the transactions totaled more than $3.22 million. One of those insiders, who is a director, also bought more than 800,000 shares the previous week.
The company appointed Timney as chief executive earlier this month. Shares closed most recently at $17.26, after hitting a multiyear low of $16.69 earlier in the day. The stock traded above $41 last summer, and the consensus price target was still up at $46.83 on last look.
A director of NuStar Energy L.P. (NYSE: NS) also stepped up to the buy window this past week. That director picked up 100,000 shares at an average of $22.98 apiece. That cost him almost $2.30 million. That director's stake was listed most recently as more than 9 million shares, while some 108 million shares are said to be outstanding.
This stock has been in retreat since October but has not yet fallen to a 52-week low. Shares closed at $21.15 on last look, so no quick pop for this insider either. They were changing hands just shy of $36 apiece early this year but sank to a 52-week low of $19.22 last March. The analysts polled have a consensus price target of $26.67.
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