雅虎香港財經 11 Stocks with Heavy Insider Buying in 2023
In this article, we will take a look at the 11 stocks with heavy insider buying in 2023. To see more such companies, go directly to 5 Stocks with Heavy Insider Buying in 2023.
Insider trading activity has always invited interest and controversy from investors and authorities. Recent history has proven time and again that insider trading transactions provide a sneak peek into companies’ behind-the-curtains ongoings and those who pay special attention to these transactions could foretell what’s about to come. If anyone had a doubt about the importance of paying attention to insider trading, they got more clarity earlier this year after the banking crisis that crushed several banks. Insiders at the now-collapsed First Republic sold a whopping $11.8 million in the bank’s stock before the bank’s downfall. Six First Republic insiders, including the bank’s executive chairman, CEO, head of credit, and banking chief, sold 90,682 shares of the company between January 17 and March 6.
Similarly, insiders at fitness equipment company Peloton sold a whopping $496 million worth of company shares in 2021 before the stock started to decline sharply. The company’s CEO and co-founder sold $119 million worth of stock starting in November 2020. Most of this selling came after the company’s shares soared and started to peak. Peloton saw a lot of growth after the pandemic as consumers ordered fitness bikes and treadmills when gyms were closed due to lockdowns.
That insider transaction activity is an important area to pay attention to is backed by research as well. A research by TipRanks showed that purchases initiated by US executives outperformed the S&P 500 over the subsequent 12 months by an average of five percentage points between 2015 and 2020.
Several academic studies discuss the importance of insider trading. Some conclusively prove that following insider transactions is profitable for investors, while others believe the connection between insider trading activity and actual profits is week. Researchers in a study titled Predictive and Statistical Properties of Insider Trading chose 30 companies and studied their stock data from 1961 to 1964 and also from 1957 to 1960 and compared the profitability of trading by insiders in these companies in both these time windows. The researchers said that “proper and prompt” analysis of insider trading data could be profitable.
Another research took into account 200 large companies and studied their data from 1962 to 1968. The research analyzed the profitability of insider trades at these companies. The results showed that insiders do possess special information which is reflected in their stock purchases or selling. However, the research said that insiders’ short-term predictions are more accurate than long-term predictions
Insider activity is also important to track to gauge the future trajectory of broader markets. In May 2022, when the stock market was panicking and investors were dumping stocks after inflation surge and the Federal Reserve’s rate-hike plans, data showed that insiders were piling into stocks and buying the dip.
Benefitting from 'Boots on the Ground' Activity
A Bloomberg report in May 2022, citing data from The Washington Service, said that over 1000 corporate executives and officers had bought shares of their own companies during the month. The broader panic that prevailed during the month in the stock market wasn’t totally unfounded, though, as subsequent months proved. The Federal Reserve continued its interest rate hike and companies took a lot of beating. But 2023 saw a solid optimism from investors and many believe the worst is now over. S&P 500 is up about 9% year to date through May 20.
The report cited Craig Callahan, chief executive officer at Icon Advisers Inc., who thinks that insider activity gives a solid view since insiders are functioning at the "boots on the ground" level. In contrast, Callahan said investors are usually at the "30,000 foot level."
The Bloomberg report also quoted an important comment from John Carey, managing director and portfolio manager at Amundi Asset Management, who said the following:
“It’s encouraging in the sense that they have enough confidence in their businesses to put more money in. We’ll see if the trend persists, if the insider buying continues, but generally it’s a positive sign.”
Luis Louro / shutterstock.com
Shadow Trading
Over the past few years, several tools have surfaced that help people track insider trading activity quickly and easily. Investors pay a lot of attention when there’s a major insider trading activity around any company. But at the same time, insiders have also become smarter. In a practice known as “shadow trading” insiders who know about a future activity (example: M&A) that could affect a stock’s price and want to buy or sell that stock use ETFs to initiate insider transactions. A research paper titled Using ETFs to Conceal Insider Trading by researchers at the Stockholm School of Economics in Riga and the University of Technology, Sydney, shows that shadow trading volume stood at $212 million per year from 2009 through 2021. Shadow trading is mostly common in healthcare, technology and industrials sectors.
Here’s what the study’s abstract says:
"Our evidence suggests that some traders in possession of material non-public information about upcoming M&A announcements trade in ETFs that contain the target stock, rather than trading the underlying company shares, thereby concealing their insider trading. Using bootstrap techniques to identify abnormal trading in treatment and control samples, we find significant levels of shadow trading in 3-6% of same-industry ETFs prior to M&A announcements, equating to at least $212 million of such trading per annum. Our findings suggest insider trading is more pervasive than just the “direct” forms that have been the focus of research and enforcement to date."
Our Methodology
For this article, we used Insider Monkey’s insider trading screener and picked the companies that saw the biggest insider purchases in terms of value so far in 2023. Some notable names in the list include Coinbase Global, Inc. (NASDAQ:COIN), DISH Network Corp. (NASDAQ:DISH) and Energy Transfer L.P. (NYSE:ET).
Stocks with Heavy Insider Buying in 2023
11. Acelyrin, Inc. (NASDAQ:SLRN)
Number of Hedge Fund Holders: N/A
California-based biotech company Acelyrin, Inc. (NASDAQ:SLRN) ranks 11th in our list of stocks with heavy insider buying in 2023. Acelyrin, Inc. (NASDAQ:SLRN) went public on May 5.
Beth Seidenberg, a director at Acelyrin, Inc. (NASDAQ:SLRN), bought $23.58 million worth of shares of the company earlier this month. The executive bought about 1.3 million shares of Acelyrin, Inc. (NASDAQ:SLRN) at $18 per share. The stock was trading at $23.43 as of May 19 morning.
Henry Gosebruch, who is part of the board of directors at Acelyrin, also bought 50,000 shares of Acelyrin, Inc. (NASDAQ:SLRN) at $18 per share.
10. Pulse Biosciences, Inc. (NASDAQ:PLSE)
Number of Hedge Fund Holders: 4
Robert Duggan, who is a 10% owner and executive chairman at Pulse Biosciences, Inc. (NASDAQ:PLSE) board, loaded up on over 10 million shares of Pulse Biosciences earlier this month. The director bought these shares at $6.51 per share.
As of the end of the fourth quarter of 2022, just 4 hedge funds tracked by Insider Monkey had stakes in Pulse Biosciences, Inc. (NASDAQ:PLSE).
Pulse Biosciences, Inc. (NASDAQ:PLSE) recently posted its Q1 results. GAAP EPS in the quarter came in at -$0.26, missing estimates by $0.04. In addition to PLSE, Coinbase Global, Inc. (NASDAQ:COIN), DISH Network Corp. (NASDAQ:DISH) and Energy Transfer L.P. (NYSE:ET) are also seeing heavy insider buying activity this year.
9. PLBY Group, Inc. (NASDAQ:PLBY)
Number of Hedge Fund Holders: 7
Media and lifestyle company PLBY Group, Inc. (NASDAQ:PLBY) ranks 9th in our list of the stocks with heavy insider buying activity in 2023. In March, PLBY Group, Inc. (NASDAQ:PLBY) board chairman Suhail Rizvi bought 7.29 million shares of the company at $2.56 per share. Over the past six months PLBY Group, Inc. (NASDAQ:PLBY) has lost about 55% in value. The stock price stands at $1.64 as of May 19.
Earlier this month PLBY Group, Inc. (NASDAQ:PLBY) posted Q1 results that missed estimates for both earnings and revenue. Roth MKM slashed its rating on the stock to Neutral from Buy following the Q1 earnings report. The analyst highlighted PLBY Group, Inc. (NASDAQ:PLBY)’s announcement about plans to find strategic alternatives for Honey Birdette and Lovers.
Greenlight Capital made the following comment about PLBY Group, Inc. (NASDAQ:PLBY) in its Q3 2022 investor letter:
“Finally, we sold unsuccessful investments in PLBY Group, Inc. (NASDAQ:PLBY) and WBD. We thought both companies were going through substantial corporate transformations. PLBY failed to execute on its strategy and we exited with a 50% loss on our investment. We sold WBD as it faces a more challenging path to executing its integration plan than we expected. It also has a sizable amount of debt. We are trying to avoid levered equities in the current economic environment. We lost approximately 40% on WBD in half a year. Both positions were small.”
8. Summit Therapeutics PLC (NASDAQ:SMMT)
Number of Hedge Fund Holders: 8
Massachusetts-based biotech company Summit Therapeutics PLC (NASDAQ:SMMT) is one of the stocks with heavy insider buying in 2023. In March, Mahkam “Maky” Zanganeh, the Co-CEO of Summit Therapeutics PLC (NASDAQ:SMMT), loaded up on a whopping 23.5 million shares of the company at $1.05 per share. Summit Therapeutics PLC (NASDAQ:SMMT)’s CEO Robert Duggan also bought a 376 million shares of the company during the same month at $1.05 per share. As of May 19, the stock is trading at $1.62. Over the past six months, the stock has gained about 82%.
7. Kinnate Biopharma Inc. (NASDAQ:KNTE)
Number of Hedge Fund Holders: 13
Kinnate Biopharma Inc. (NASDAQ:KNTE) is a California-based precision oncology company. James B Tananbaum, a director at Kinnate Biopharma Inc. (NASDAQ:KNTE), earlier this month bought about 1.78 million shares of the company at $2.8 per share. Carl Gordon, PhD, another member of Kinnate Biopharma Inc. (NASDAQ:KNTE)’s board, has bought 2.87 million shares of the company so far in 2023 at $2.71 per share. Gordon has been buying shares of Kinnate Biopharma Inc. (NASDAQ:KNTE) since January and his last insider purchase took place on May 5. Year to date the stock is down about 34%.
6. American Assets Trust, Inc. (NYSE:AAT)
Number of Hedge Fund Holders: 13
Real estate company American Assets Trust, Inc. (NYSE:AAT) is one of the notable stocks with heavy insider buying in 2023. Billionaire Ernest Rady, the founder and CEO of American Assets Trust, Inc. (NYSE:AAT), bought over 939,600 shares of the company at $18.65 per share. The executive has been at it since last year and his latest insider purchase transaction in American Assets Trust, Inc. (NYSE:AAT) was reported on May 12.
As of the end of the fourth quarter of 2022, 13 hedge funds tracked by Insider Monkey had stakes in American Assets Trust, Inc. (NYSE:AAT). The biggest stakeholder of American Assets Trust, Inc. (NYSE:AAT) was Dmitry Balyasny’s Balyasny Asset Management which owns a $26 million stake in the company.
In addition to AAT, some other stocks that are seeing heavy insider buying activity this year include Coinbase Global, Inc. (NASDAQ:COIN), DISH Network Corp. (NASDAQ:DISH) and Energy Transfer L.P. (NYSE:ET).
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Disclosure: None. 11 Stocks with Heavy Insider Buying in 2023 is originally published on Insider Monkey.
