When insiders conduct open market purchases, this can often represent a voluntary form of commitment to the stock that investors should note. Rarely do these purchases reflect alternative motives, which could be found in other sorts of purchases such as those related to expiring options or warrants. These purchases additionally abide by the thought that while there are many reasons for insiders to sell their shares, there are often very few reasons to buy shares apart from an expectation of future gains.
Often considered the most respected employee in a company to follow is the Chief Executive Officer. After all, he is the commander at the ship's helm, making the necessary adjustments to safely navigate the company away from risk and into profitable endeavors. This person is the head of the company, the one employed to be aware of the surrounding situation in regards to the company's future. Therefore, when a CEO buys his own company's stock, it can often be a strong symbolic action. After all, when insiders buy shares in seeking their own good, attentive investors can often benefit. By following those who are known to have a greater understanding of the company's opportunities, investors can often follow suit and enjoy the rewards of a more timely purchase.
The following five companies recently had CEOs making atypically large insider purchases. This can often serve as a prelude to a rise in the company's share price. However, remember that insider purchases represent just one part of the available information. Interested investors should continue to conduct their own due diligence prior to making any investment decisions. It is advisable to be familiar with the company's financials, chart performance, and recent press releases in order to more accurately assess the risks, benefits, and overall stability of the company at hand.
|General Motors Co. (GM)||Daniel F. Akerson||02/21/13||$26.50||25,000||$662,500|
|Opko Health, Inc. (OPK)||Phillip Frost||02/22/13||$7.03||45,000||$316,539|
|Terreno Realty Corp. (TRNO)||W Blake Baird||02/22/13||$16.60||60,000||$996,000|
|Calamos Asset Management, Inc. (CLMS)||John P. Calamos Sr.||02/22/13||$10.64||53,613||$570,490|
|PVR Partners, L.P. (PVR)||William H. Shea Jr.||02/25/13||$22.37||25,000||$559,143|
Of these five listed purchases, one of the more notable transactions appears to be that conducted by William Shea, CEO of PVR Partners. The last insider purchases in the company were conducted by Directors Edward B. Cloues II and Thomas W. Hofmann back in November 2011 for $179,625 and $191,680 respectively. Shea's purchase on February 25, was also joined by additional insider purchases from Cloues and CFO Robert B. Wallace for $56,172 and $44,948 respectively. On February 20, the company's unit price fell more than 13% due to missed expectations upon release of the company's earnings.
Terreno Realty's W Blake Baird appears to have partaken in the follow-on offering of the company's stock with this latest purchase. The spot secondary included 5 million shares priced at $16.60 with underwriters exercising their option for 750,000 additional shares of common stock. In the last year, the industrial REIT founded in 2009 has risen 20%.
Another noteworthy mention should be given to Opko Health's Phillip Frost who continues his aggressive insider buying with this latest purchase at market highs. By far, the CEO remains the most consistent investing insider with his large tracts of purchased shares on a near daily basis. With this 45,000 share purchase, the CEO accounted for approximately 2% of the average daily volume (calculated on a 3-month period). Over the last year, the stock has risen 42%.
Disclosure: I am long OPK. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: I may initiate a long position in CLMS over the next 72 hours.