There can be many reasons why insiders might sell their own company's stock: a big personal purchase like a house; cash to fund a charity; and many other reasons.
Whichever the case is, insiders usually buy shares because they think the stock is a bargain and has upside potential. When mutual funds or hedge fund managers (and even everyday investors) see a lot of insider activity, it most definitely triggers a reason to take a second look at the company. Recently, the 4 companies below have seen heavy insider buying.
Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) is principally engaged in the operation and development of the Cracker Barrel Old Country Store restaurant and retail concept (Cracker Barrel). The current market price is $52.50, and the stock offers a1.94% dividend yield. CBRL has a market cap of 1.20B and an enterprise value of $1.74B. The current EPS is $3.63 and for fiscal year 2012, analysts estimate that CBRL will earn $4.30. For the 1st quarter of fiscal year 2012, CBRL announced earnings per share of $1.03, representing 24% of the total annual estimate. For fiscal year 2013, analysts estimate that CBRL's earnings per share will grow by 9% to $4.68. Cracker Barrel’s 52-week range is between $37.31 and $54.98. The 10, 21, 50 and 200 day moving averages are all up showing a bullish upward trend. Also, perhaps the best news is the fact that an insider reported to have bought shares on three separate occasions; 160,000 shares at $50.96, 60,000 shares at $51.36, and 65,000 shares at $51.91 amounting to a total of $14,610,478.
Synta Pharmaceuticals Corp. (NASDAQ:SNTA) is a biopharmaceutical company focused on discovering, developing, and commercializing small molecule drugs to extend and improve the lives of patients with medical conditions. The Company has 3 clinical-stage drug candidates and several drug candidates in the preclinical and discovery stages. The current market price is $4.54 with a one-year analyst price target of $7.33. This represents a 61.45% upside potential. SNTA has a market cap of $224.33M and an enterprise value of only $178.12M. The fact that this is a start-up pharmaceutical company a substantial amount of risk is inherited, but the risk-reward must be evaluated. Currently Synta Pharmaceuticals has $50.66M in cash on its books and only $16.80M in debt. Although current EPS is $1.09, analysts estimate that SNTA's earnings per share will grow by 6% in 2012. Moving Average Convergence/Divergence (MACD) indicates a Bullish Trend, and the 21 and 50 day moving averages do as well. The best news in regards to this company is the fact that Bruce Kovner, a director, just bought 1,136,363 shares at $4.40, amounting to nearly $5M.
VMware, Inc. (NYSE:VMW) is a provider of virtualization solutions from the desktop to the data center. The company's suite of virtualization solutions addresses a range of complex information technology (NYSE:IT) problems, that include cost and operational inefficiencies, facilitating access to cloud computing capacity, business continuity, software lifecycle management, and corporate computing device management. The current market price is $87.92 with a one-year analyst price target of $107.11. This represents a 21.83% upside potential. This company has $3.98B in cash and total debt amounting to only $450.00M. VMW’s 52-week range is between $74.04 and $111.43. VMW was recently upgraded by Oppenheimer from perform to outperform. Current EPS is $1.49, and analysts estimate that VMW’s earnings per share will grow by 68% to $2.51 by 2012. The best news in regards to VMware is the fact that an insider reported to have bought shares on two separate occasions; 71,900 shares at $83.35 and 47,700 shares at $84.08 amounting to a total of almost $6 million.
Vical Incorporated (NASDAQ:VICL) researches and develops biopharmaceutical products based on its deoxyribonucleic acid (Private:DNA) delivery technologies for the prevention and treatment of serious or life-threatening diseases. The current market price is $3.76 with a one-year analyst price target of $6.60. This represents a 75.53% upside potential. This company is in good shape due in part to its $52.63M in cash on its books and no debt. VICL has performed exceptionally well in the biotech group for the prior year. The stock was up over 120% in part to its positive developments in its pipeline and its lead product Allovectin being tested in phase 3 trials. VICL's current quarter consensus estimate has increased by 3.3%, while consensus estimates for the Generic & Specialty Pharmaceutical Industry have dropped an average -1.0% during the same time period. The 52-week price range for Vical is $1.70 - $5.30. Perhaps the best news in regards to VICL is the fact that James R Singer, an insider, just bought 2,666,667 shares at $3.75 amounting to $10 million.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.