4 Stocks Insiders Are Buying

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Includes: ALSN, BIIB, CERN, GRUB
by: The Insiders Forum
Summary

Today, we continue a recent weekly feature here on the Insiders Forum.

Each week, we highlight four or five notable stocks with significant and recent insider buying.

In this week's edition, we highlight a large biotech concern with major new insider buying and three other stocks seeing their first insider purchases in many years.

"There is no fire like passion, there is no shark like hatred, there is no snare like folly, there is no torrent like greed." - Siddharta Gautama

Insider buying has slowed down in recent weeks as it does every earnings season. So which stocks are insiders still purchasing? Here are four interesting names that have seen recent insider buying.

Grubhub (GRUB) sees its biggest buy in at least four years. Its CEO scarfed up approximately $1 million of new shares on April 30th. Two directors recently made much smaller buys totaling less than $100,000 in aggregate in three transactions in February and one in early April.

The company's share price has declined precipitously recently, although the stock did bounce up some seven percent in trading Tuesday. Wedbush dropped its price target from $130 to $100 in mid-April as Uber (NYSE:UBER) (which controls Uber Eats) filed to come public.

Source: Company Presentation

The company did beat the bottom-line consensus with its Q1 results on April 25th and reaffirmed forward guidance. GRUB recently did an investor presentation, showing it is getting more efficient in adding new customers (see above). The CEO seems to be signaling he sees value in the shares at this level with his recent purchase.

Next up is Cerner (CERN). This Kansas City based provider of healthcare information technology solutions and tech-enabled services sees its first insider purchase I can find since 2012. A director bought nearly $500,000 of new equity on April 30th.

On April 25th, the company announced Q1 results that were in line to the top- and bottom-line consensus. The company recently came to an agreement with activist investor Starboard Capital.

The agreement called for four new directors to Cerner's board, two nominated by Starboard. Cerner will also establish a finance and strategy committee to coordinate and oversee the operational efficiency and margin expansion efforts of the company with the goal of bringing up its operating profit margins to 20%. The company will add $1.2 billion to an existing stock repurchase program that had $300 million left on it. A recent SA article covers this deal in more detail. At least one insider appears to believe this effort will yield positive results for shareholders given his recent purchase.

Allison Transmission Holdings (ALSN) also sees a rare insider buy. A director bought just over $225,000 of stock for $46.00 a share on April 26th. To find the last insider purchase in this stock, you have to go back to October of 2014.

Source: Earnings Call Slides

Three days prior to the insider activity, Allison posted mixed Q1 results. Earnings came in lower than the consensus, while revenues were above expectations (summary above). After Q1 earnings came out, both Robert W. Baird ($61 price target) and Oppenheimer ($53 price target) reiterated Buy ratings on ALSN. Stifel Nicolaus ($51 price target) maintained its Hold rating on Allison. Revenues should fall slightly overall in FY2019 according to the current consensus and the stock goes for roughly 10 times earnings. ALSN pays a small one and a quarter percent dividend yield as well.

Finally, we have Biogen (BIIB). The stock took a major hit when the large biotech stalwart decided to curtail its key Alzheimer's efforts in mid-March after late-stage trials proved to be ineffective.

Source: Earning Call Slides

The company posted solid Q1 results on April 24th and bought back over $1 billion of its the shares during the quarter and recently added $5 billion to its stock repurchase program. Biogen also has a fairly deep pipeline in development.

Source: Earning Call Slides

The company since discontinuing its Alzheimer's development has become increasingly speculated as being an active M&A participant, most likely as an acquirer, although some analysts has stated the company itself could eventually be a major acquisition for a large concern.

One thing for certain, some insiders seem to think the stock is now undervalued. The CEO bought just over $1 million in new shares on May 1st. More impressively, a director bought nearly 190,000 shares in Biogen in three transactions from April 30th through May 2nd.

And those are four firms with notable insider buying in their stocks over the past week or so.

"He who imagines he can do without the world deceives himself much; but he who fancies the world cannot do without him is still more mistaken." - François de La Rochefoucauld

Bret Jensen is the Founder and author of articles on The Biotech Forum, The Busted IPO Forum, and The Insiders Forum.

Disclosure: I am/we are long BIIB. 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.