Insider activity is often worth observing and is always newsworthy. While such activity is not a pure indicator of when to buy or sell a stock, it is a good starting point upon which to perform analysis or a method of validating analysis already performed. Insider activity might provide an accurate profile of business prospects, based on the insiders' knowledge of the company and industry.
This list is of four small-cap companies with businesses tied to U.S. retail consumption that have experienced noticeable net stock purchases by insiders over the last six months. Insiders such as officers, directors, and beneficial owners must report their trades to the SEC within two business days. No matter the reason, insider activity is important news that the market and press should acknowledge.
Pacific Sunwear of California Inc. (PSUN)
- Industry: Apparel Stores
- Market Cap: $167 million
- Insider Activity: Insiders purchased over 10 million shares or about 29% of the float.
- Note: Short interest is over 30%
Primo Water Corporation (PRMW)
- Industry: Beverages – soft drinks
- Market Cap: $252 million
- Insider Activity: Insiders purchased 190,000 shares or over 1% of the float.
- Note: Short interest is near 8%
Saul Centers Inc. (BFS)
- Industry: Retail REIT
- Market Cap: $706 million
- Insider Activity: Insiders purchased over 195,000 shares, or over 1% of the float.
Town Sports International Holdings Inc. (CLUB)
- Industry: Sporting Activities – exercise clubs
- Market Cap: $158 million
- Insider Activity: Insiders purchased over 170,00 shares, or over 1% of the float
Take these insider buys with a grain of salt. While many insiders seem to know what they are doing, many have lost money and also might even consider their insider purchase speculative in their greater portfolio. Additionally, several of these companies have significant short positions, indicating that many in the market strongly disagree with insider sentiment.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.