- Insider buying can be an encouraging signal for potential investors.
- An executive chair continuing making "very extreme" purchases in the past week.
- A couple of insiders made both bought and sold shares recently.
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.
A director of TransDigm Group Incorporated (NYSE: TDG) pulled the trigger midweek, purchasing less than 230,000 shares at an average of $434.90 apiece. That totaled nearly $100 million. Note that this director and other insiders also sold shares of the aircraft parts maker last week.
The Cleveland-based company posted better-than-expected quarterly results and raised guidance early in February. Shares closed last week at $436.89, so the timing of the purchase seems fortunate. The stock changed hands at a 52-week high of $440.25 a share, and the analyst consensus price target is $443.
The Kinder Morgan Inc (NYSE: KMI) executive chair of the board, Richard Kinder, picked up more than 319,000 additional shares of this Houston-based energy infrastructure giant. At prices that ranged from $18.735 to $19.17 a share, last week's transactions totaled more than $6.10 million.
Barron's recently had a few thoughts on what the "very extreme" insider buying at Kinder Morgan may mean. The stock has rallied over 25 percent year to date and closed most recently at $19.32, above Kinder's latest purchase price range. The stock has traded between $14.62 and $19.47 in the past 52 weeks, but analysts on average anticipate that the price will go as high as $21.28.
Restaurant Brands International
Restaurant Brands International Inc (NYSE: QSR) saw the president of its Tim Hortons unit step up to the buy window midweek. At prices that ranged from $64.52 to $64.78 apiece, the 45,000 shares reportedly acquired cost over $2.91 million. Note that this director sold over $12.26 million worth of shares the week before, and the latest purchase reportedly was meant to correct an inadvertent sale of shares and to satisfy the reporting person's holding requirements.
The latest round of 13F filings revealed a notable reduction in Bill Ackman's stake in Restaurant Brands. The stock ended the week at $ 63.46 per share. The shares have traded as high as $65.59 in the past year, but the consensus price target was $70.50 on last look.
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