Insiders are people who have access to confidential information about a company. Over the years, there have been many examples of insiders using this information to gain an unfair advantage over uninformed investors. For example, an insider may know that some news it about to be released that will drive the stock price down. They can use this information to sell their stock before the news becomes public.
The SEC has established rules and regulations to prevent this kind of activity. One of them is the requirement that an insider must publicly disclose when they have made a transaction in their stock.
Because of this, we can find out if the insiders are buying or selling, and this can lead us to profit opportunities. A simple yet effective way to screen for stocks that are potential buys is to see if the insiders are buying shares after the price has dropped.
There are many reasons why a company insider may be motivated to sell their stock, but there is only one reason why an insider would buy it! They believe that it will trade at a higher price where they can make money.
These stocks are on my radar screen as potential buys due to the significant insider buying that has recently occurred.
Cornerstone Building Brands (NYSE:CNR) designs and manufactures building products for the construction industry. It makes things like windows and siding. And over the past year, the price on CNR has dropped from $20 to current levels around $6.20. Some analysts attribute this to concerns over the company having too much debt.
Jeffrey Lee just joined the company in June as its new chief financial officer. Lee must believe that he can help turn it around, because he just bought 80,000 shares at an average price of $5.85. Nothing says “confidence” like a $470,000 investment!
James Metcalf is the chairman and CEO of Cornerstone. He must also feel that the stock is a good value, since he recently paid $4.45 for 100,000 shares and has already made a significant profit. The most recent close was $6.17. This is a gain of 38% in just one month!
W & T Offshore (NYSE:WTI) is involved in the exploration, development and acquisition of oil and natural gas properties. Like other companies involved with natural gas, the share price of WTI has fallen dramatically due to the recent drop in gas prices. Since April, this company has lost almost 40% of its value.
Virginia Boulet is a director of W&T. In early June, she bought 7,000 shares at $4.34. Boulet is probably happy with her investment because she is already up almost 10%!
Tracy Krohn is the chief executive officer of the company. He is one of the richest people in the country and a racing car enthusiast. I would love to hang out with him one day.
Krohn must believe that natural gas prices will rebound and that there are better times ahead for WTI. He just purchased 15,000 shares.
Greif (NYSE:GEF) produces industrial packaging products and services. In the past four months, the price of GEF has dropped from $42 to $33. Analysts have attributed this to higher debt burdens and lower volumes of sales in some sectors. It could also be under pressure due to concerns over trade wars and tariffs.
Peter Watson is the president and chief executive officer of Greif. Last week it was reported that Watson paid $32.71 for 15,000 shares of GEF. That is a nearly $500,000 investment.
Lawrence Hilsheimer is the chief financial officer and executive vice president of the company. Apparently, he agrees that the stock is currently undervalued because he just bought 5,000 shares at $33.82. This was a roughly $170,00 investment.
Conagra Brands (NYSE:CAG) manufactures and sells processed and packaged food.
CAG has made a significant recovery since the selloff in late December. At the end of last year it was trading around $21 and the most recent close was $27.61. However, it is still well below its highs from two years ago, when it was trading just over $40.
Craig Omtvedt is a director of Conagra. He must believe that the long-term prospects for the company are very bullish. He just made a significant investment of around $670,000 when he purchased 25,000 shares at an average price of $26.71.
Wall Street agrees with Omtvedt that the shares are undervalued. Of the 14 brokers that provide research on CAG, 11 of them have buy ratings on it. The average target price is $32.
MVC Capital (NYSE:MVC) is a non-diversified closed-end management investment company.
MVC has made a nice recovery since the end of last year, but it is still well below the highs of last September when it was trading around $11 a share. The most recent close was at $9.43.
Michael Tokarz is 15-year veteran of the company. He is the chairman and principal executive officer. As an insider of an investment manager, it is fair to say that he knows a lot about the markets. Apparently, he believe that MVC’s recovery will continue, because he just invested over $100,000 of his own money in the stock.
Only two firms follow MVC, but they agree it is undervalued. One has a buy on it, one has a hold, and the average target price is $12.
Crexendo (OTCMKTS:CXDO) is in the telecommunications business. It sells broadband internet and other cloud business services. CXDO stock is a company that seems to be going in the right direction. Over each of the past 5 years it reported a loss, but each year’s loss was less than the year before.
In 2014 the company lost 57 cents a share. In 2015, the loss was 35 cents. In 2016 it was 21 cents, and in 2017 it was 7 cents a share. Last year CXDO only lost 2 cents a share. Maybe this is why since last November, the price of the stock has more than doubled.
Steven Mihaylo is the CEO of Crexendo. He must think that this rally will continue. Over the past month he has invested almost $100,000 into the stock.
No Wall Street firms follow this company. Some investors believe that this could be a bullish dynamic. If they get into it before the big players “discover” it, they can make significant profits.
Proofpoint (NASDAQ:PFPT) is a cybersecurity company. It engages in the provisions of cloud-based solutions.
This company is on the radar screen because it has had some very significant and interesting insider selling recently.
Bhagwat Swaroop is the executive vice president of PFPT. He just sold 5,000 shares at $123.21. Michael Johnson and Richard Herren are directors of the company. Mr. Johnson sold $100,00 worth of stock and Mr. Herren sold $250,000 worth.
What caught my attention is the fact that these insiders all sold their stock right around levels that were a significant top. PFPT peaked around $125 last year. Afterwards it fell by 35%.
The fact that these three insiders are selling their stock around this level tells me that they probably think it is overvalued. If I was a shareholder of PFPT, this would concern me and I would probably be a seller as well.
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