- Insider buying can be an encouraging signal for potential investors.
- A couple of notable insider buys last week came from CEOs.
- Shares of two of these companies have been trading near 52-week lows.
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.
Macquarie Infrastructure Corp (NYSE: MIC) saw its chief executive officer, Christopher Frost, add to his stake this past week. At a per-share price of $39.73, the 25,160 shares reportedly acquired, via a trust, cost around $999,600. Note that a director purchased 12,000 shares earlier in the month as well.
Higher costs associated with acquisitions were in part to blame for the disappointing most recent quarterly report. But the stock ended last week at $41.70 per share, so Frost's latest purchase seems well timed. Shares traded as high as $67.84 in the past year, but the 52-week low is $36.20 and the consensus price target is $49.17.
One Steel Dynamics, Inc. (NASDAQ: STLD) director made a notable share purchase this past week. At $33.85 apiece, the 20,000 shares acquired cost him about $677,000. His stake was listed as more than 5.0 million shares, compared with approximately 236 million of them listed as outstanding.
Steel Dynamics has announced plans to build a new electric-arc-furnace carbon sheet steel mill in the United States for up to $1.8 billion. Still, shares sank to a new 52-week low of $33.38. They ended Friday at $35.20, which is around 6 percent lower in the past week, compared to a 3 percent or so gain the S&P 500. The consensus price target on the shares is $51.71.
President and CEO Thomas Smith Jr. of Sothebys (NYSE: BID) also stepped up to the buy window this past week. He picked up 15,250 shares at between $40.73 and $41.11 apiece. That cost him more than $624,600. Smith reportedly made a gift of 15,250 shares and then purchased the same number of shares so as to retain his prior level of investment.
This New York-based auctioneer posted better-than-expected quarterly results at the beginning of the month. But the stock was trading at $39.99 a share on last look, lower than the above purchase price range but more than the recent 52-week low of $37.66. The stock has traded as high as $60.16 in the past year. Analysts have a consensus price target of $55.20.
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