Investors closely monitor insider buys. But who are ‘insiders’?
An insider is defined by Section 16 of the Security Exchange Act as an officer, director, 10% stockholder, or anyone who possesses information because of their relationship with the company.
Of course, many strict rules apply to insiders. Notably, they have a longer holding period than most, a critical aspect investors should know.
Several companies – Dominion Energy D, Carvana CVNA, Keurig Dr Pepper KDP, American Homes 4 Rent AMH, and Enphase Energy ENPH – have all seen recent insider activity. Let’s take a closer look at the transactions for those interested in trading like the insiders.
Enphase Energy
Enphase Energy is a global energy technology company that delivers energy management technology for the solar industry.
The CEO of Enphase Energy recently made a splash, acquiring 4000 shares at a total transaction value of roughly $480k. Analysts have taken a bearish stance on the stock, revising their earnings expectations lower over the last several months.
Image Source: Zacks Investment Research
Down 40% over the last year, the purchase reflects a confident stance among the CEO, scooping up shares at slashed levels.
American Homes 4 Rent
American Homes 4 Rent is an internally managed real estate investment trust. A Director recently purchased roughly 1,000 shares, totaling $23.7k.
Investors stand to reap a passive income from AMH shares, currently yielding 2.4% annually. And dividend growth is robust, with the company carrying a 50% five-year annualized dividend growth rate.
Image Source: Zacks Investment Research
Keurig Dr Pepper
Keurig Dr Pepper is a beverage and coffee company in the United States and Canada. The CEO recently made a big purchase, acquiring 171k shares at a total cost of $5 million.
Like AMH, KDP shares reward investors nicely, paying out 2.9% annually. Dividend growth is also apparent, with the company carrying a 10% five-year annualized dividend growth rate.
The current yield is a few ticks higher than the average of those in the Zacks Beverages – Soft Drinks industry, as shown below.
Image Source: Zacks Investment Research
Dominion Energy
Dominion Energy and its subsidiaries produce and transport energy in the United States. Analysts have taken a bearish stance on the company’s outlook, with the current $3.01 Zacks Consensus EPS estimate down 22% over the last year and pushing the stock into an unfavorable Zacks Rank #4 (Sell).
Image Source: Zacks Investment Research
The CEO of Dominion recently bought 21.7k shares at a total cost of just under $1 million. The company’s near-term outlook is undoubtedly cloudy, and investors would likely be better off waiting for positive earnings estimate revisions to hit the tape.
Carvana
Carvana is a leading e-commerce platform for buying and selling used cars. A Director recently purchased 1.3k shares at a total cost of $100k.
Shares have been on a remarkable run over the last year, gaining nearly 800% in value and crushing its respective Zacks industry performance.
Image Source: Zacks Investment Research
Bottom Line
Many investors closely monitor insider buys, as they can provide insight into the longer-term picture. After all, if an insider didn’t believe in the company’s future pathway, why would they buy?
All five stocks above – Dominion Energy D, Carvana CVNA, Keurig Dr Pepper KDP, American Homes 4 Rent AMH, and Enphase Energy ENPH – have seen recent insider activity.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
