Heavy insider buying is usually interpreted as a bullish signal by the investment community because there appears to be only one reason corporate insiders are buying shares in their own companies. Unlike many indicators based on historical data, insider buying usually serves as a forward-looking indicator. Most of the time, insider purchases show that corporate insiders believe their company’s stock is worth much more than the price tag set by the invisible hand of Mr. Market and they tend to be very accurate on most occasions.
Past research, analysts and insider trading experts suggest that clusters of insider buying are significantly more informative than single buys. Hence, a herd of insiders buying shares is a much better signal than a “lone wolf” who may be wrong. As Dr. Inan Dogan, the founder of Insider Monkey and a well-known researcher in the field of insider trading, said in an interview held in the not-so-distant past: “One insider might overestimate a company’s prospects, but there is higher uncertainty when many insiders are buying.” With that in mind, the following article will reveal clusters of insider buying recently observed at several companies, as well as discuss other notable insider transactions reported with the SEC on Thursday.
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CEO of Industrial Distributor Buys Shares Amid Price Weakness
To start with, the man in charge of HD Supply Holdings Inc. (NASDAQ:HDS) increased his holding of company stock this week. Joseph J. DeAngelo, Chairman, President and CEO, snatched up 32,100 shares on Thursday at a price tag of $31.07 each. Following the recent purchase, Mr. DeAngelo currently owns 242,782 shares of HD Supply.
The industrial distributor in North America has seen the value of its shares advance by 3% since the beginning of the year despite experiencing a 14% plunge in the past month. The aforementioned insider purchase comes shortly after analysts at RBC Capital Markets downgraded HD Supply Holdings Inc. (NASDAQ:HDS) to ‘Sector Perform’ from ‘Outperform’ and cut their price target to $35 from $43. RBC analysts anticipate the industrial distributor’s shares to range-bound in the upcoming months as the company attempts to “right the ship.” According to RBC, HD Supply needs several quarters to tackle supply chain problems and restore investor confidence. John Griffin’s Blue Ridge Capital was the owner of 8.29 million shares of HD Supply Holdings Inc. (NASDAQ:HDS) at the end of the June quarter.
The next page of this article will discuss clusters of insider buying registered at two separate companies.