- Insider buying can be an encouraging signal for potential investors.
- Several insiders made return trips to the buy window in the past week.
- That includes an executive chair continuing "very extreme" purchases.
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 significant insider purchases reported in the past week, and note that an insider also made sizable purchases of Plantronics Inc (NYSE: PLT) shares.
The Kinder Morgan Inc (NYSE: KMI) executive chair of the board, Richard Kinder, has purchased 200,000 more shares of this Houston-based energy infrastructure giant. At prices that ranged from $18.35 to $18.44 a share, last week's transactions totaled around $3.67 million.
Barron's had a few thoughts on what the "very extreme" insider buying at Kinder Morgan may mean. The stock has rallied about 19 percent year-to-date and closed Friday at $18.80, above Kinder's latest purchase price range. The stock has traded in a range of $14.62 to $18.98 in the past 52 weeks, but analysts on average anticipate that the price will go as high as $21.28.
Goodyear Tire & Rubber Co (NASDAQ: GT) saw a director step up to the buy window midweek. At prices that ranged from $18.48 to $18.78 apiece, the 35,000 shares reportedly acquired cost over $652,000. That more than doubled the former Procter & Gamble executive's stake in Goodyear to 50,000 shares.
A recent earnings miss resulted in an analyst downgrade last week that cited pricing headwinds and a supply and demand imbalance. The stock ended the week at $18.79 per share, near the top of the director's listed purchase price range. The shares have traded as high as $30.01 in the past year, but the consensus price target was $20.78 on last look.
CEO John Barry of Prospect Capital Corporation (NASDAQ: PSEC) pulled the trigger early last week as well. The 100,000 shares purchased, at an average of $6.39 apiece, totaled less than $639,000. Note that Barry and other insiders scooped up more than 2.26 million shares back in December.
The business development company posted solid quarterly numbers and declared monthly distributions last week. Shares were trading at $6.55 on last look, after rising less than 2 percent in the past week, about the same as the S&P 500. The stock changed hands as high as $7.60 a share last August, but note that the current consensus price target is just $5.00.
In the past week, DISH Network Corp (NASDAQ: DISH) saw an executive vice president building up his stake once more. At prices that ranged from $28.99 to $31.67 per share, the 20,000 shares acquired totaled over $596,000. The executive has made period purchases stretching back to last September, pursuant to a 10b5-1 trading plan.
Some see ongoing disputes with HBO and Univision leading to further subscriber weakness. The stock ended last week at $30.90 per share, which is within the above purchase price range. While the analysts' consensus target was last seen at $45.95, the stock has traded as high as $45.76 in the past 52 weeks.
After the chief executive and other insiders bought $2.2 million in Zimmer Biomet Holdings Inc (NYSE: ZBH) stock the previous week, another director followed up with 2,000 shares last week. At about $123.62 apiece, that director's acquisition totaled more than $247,000.
This American medical products company was spun off from Bristol-Myers Squibb in 2001, and it posted solid quarterly results at the beginning of the month. Its share price increased marginally last week and closed Friday at $123.65. The stock has traded between $96.99 and $134.55 in the past 52 weeks, and analysts currently see the price going as high as $130.21.
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