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[Editor's Note: This article is updated each week with the latest insider moves.]
The SEC has established numerous rules over the years to protect investors, including measures that prevent insiders from buying to take advantage of nonpublic information. Insiders have access to confidential information about a company. Sometimes that information could move the stock price once it goes public.
For example, if an insider knows the company is about to announces earnings that are greater than estimated, the insiders could secretly buy options or shares.
Fortunately for us "outsiders," the SEC requires that insiders publicly disclose when they make a transaction in their company's stock. This means that we can find out when the insiders are buying. This can be a great indicator, especially if the price has recently made a large move downwards.
This is because there are many reasons why an officer or a director of a company may decide to sell their stock - they could simply need the money - but an insider will only buy a stock for one reason! They believe that the stock is undervalued and that they will make a profit.
Due to the significant insider buying that has recently occurred, these stocks came up on my radar screen as potential investments to consider.
Stocks to Buy With Insider Buying: Carnival Corp (CCL)
Carnival Corp (NYSE: CCL ) is a cruise ship company. The headquarters are in Miami, Florida, but it has worldwide operations.
CCL has lost about 10% of its value since its June 20 earrings release disappointed investors. Concerns were not only about the earnings, but about the guidance as well. Since then, there have been some downgrades and price target reductions.
Arnold Donald is the president and chief executive officer of CCL. He has been with the company for almost 20 years. Apparently Mr. Donald believes that this selloff is done. He just made a $1 million investment when he bought 22,000 shares around $45.31.
Mr. Donald also made a similar size investment in December when the markets made the significant move lower and CCL was trading around current levels. He must believe that the stock is a good value at these levels.
Denbury Resource (DNR)
Denbury Resource (NYSE: DNR ) is an independent oil and natural gas company involved in exploration, drilling and extraction. The company operates in the Gulf Coast and Rocky Mountain regions.
DNR stock has been in a death spiral since October, when it was trading around $6.50 a share. Its most recent close was $1.24. That is an 80% decrease in shareholder value. A lot of this is due to the depreciation in natural gas prices that has occurred since then. There have also been concerns over acquisitions that the company was involved in.
Christian Kendall is the president and CEO of Denbury, and he just invested $125,000 of his personal funds when he bought 100,000 shares.
Wall Street isn't too excited about DNR's future prospects. Currently, 11 firms follow it and the average rating is a hold, according to MarketWatch .
Macerich (NYSE: MAC ) is real estate investment trust, or REIT. It acquires, manages and develops shopping centers throughout the United States.
Some analysts have attributed the share price to the ongoing issues of traditional "brick and mortar" stores suffering from the Amazon (NASDAQ: AMZN ) effect. After all, if retail store outlets aren't doing well, they will be closing, and this will in turn have a negative affect on malls and shopping centers.
The stock of MAC has lost over 40% of its value over the past year. But two of its insiders think the selloff is overdone because they just made significant investments.
Edward Coppola is the president of Macerich. He just invested $165,000 when he paid $32.88 for 5,000 shares. And Andrea Stephen is a director. She just bought 20,000 share at around $32.50. This is an investment of $650,000! Each of these insiders apparently believes that MAC has great future prospects.
AbbVie (NYSE: ABBV ) is a research-based biopharmaceutical company. It develops and sells products that treat conditions such as chronic autoimmune diseases
Over the past year, shares of ABBV stock have lost about 20% of their value. This includes last week's drop of 15%. This dramatic plunge was due to the announcement that ABBV is buying Allergan (NYSE: AGN ). Clearly some investors don't think that this deal makes good sense .
Three insiders of AbbVie must think that this selling was irrational, though. All three made significant investments.
Edward Rapp is a director of the company. He just invested $500,000 when he bought 7,500 shares at $67.30. Roxanne Austin, also a director, just invested $775,000 when she paid $67.50 for 11,500 shares.
William Chase is the executive vice-president of finance and administration. He just bought 30,400 shares at a price of $67.30. That's $2 million!
These insiders are already profiting. The stock is trading $5 higher than where they bought it.
TG Therapeutics (TGTX)
TG Therapeutics (NASDAQ: TGTX ) is a biopharmaceutical company. It develops treatments for B-cell malignancies and auto immune diseases.
Last September, shares of TGTX lost about 65% of their value, dropping from $12.50 to $5.25. This was due to disappointing results in one of their drug trials.
The stock traded sideways from then through March when it started to make a recovery. Since then the shares have more than doubled in value.
Michael Weiss is the CEO and president of TG Therapeutics. Mr. Weiss must believe that this rally is going to continue. He just bought 50,000 shares at a price of $7.04, an investment of $350,000.
Wall Street agrees with Mr. Weiss that this stock is undervalued. According to MarketWatch , the 6 firms that follow it all have buy ratings on it. The average target price is $19, more than 100% higher than the most recent close.
GigaMedia (NASDAQ: GIGM ) provides digital entertainment services. Through its subsidiary FunTown, it provides online gaming.
GigaMedia's customers may be having fun, but this year its shareholders sure haven't been. The prices of the shares have fallen from around $3 to $2.36.
I am not sure why the share price has dropped. Chang Ming Huang doesn't seem to know why the price has dropped either. He is the CEO of the company. On June 19 he bought 57,885 shares at $2.50. That is $145,000. He also invested an additional $95,000 earlier in the month.
No firms on Wall Street officially follow GIGM, but some investors think that it could be a bullish dynamic when a company isn't followed. This is because if they invest before it is 'discovered' by The Street, they may be in it before the big players get involved and it makes a dramatic move upwards.
Calithera Biosciences (CALA)
Calithera Biosciences (NASDAQ: CALA ) discovers and develops small molecule drugs that are used to treat cancer.
Over the past 3 months, shares of CALA have fallen from $6 to $4. Most of this drop occurred in mid-June when the company announced that it was going to issue more shares. It had spiked just before this when they announced positive results from a trial.
Maybe they announced the share offering because management felt that they could get a higher price. Investors disagreed and sold the stock. They feel that the negative results of the stock dilution will far outweigh the positives that came from the trial.
Susan Molineaux Ph.D is the president and CEO of CALA. Christopher Molineaux Ph.D is Senior Vice-President of Development. And they both seem to believe the stock will rally from current levels because these two insiders each just purchased 50,000 shares at $3.88, a total investment of almost $400,000.
As of the time of this writing Mark Putrino did not hold any positions in the aforementioned securities.
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