Recent studies (read about them) show that insider purchases can be usually interpreted as bullish signals. Wonder why? Well, we believe that insiders face a strong incentive to diversify their wealth away from the company they work in – and therefore reduce their risk. The fact that they ignore the benefits of diversification and buy the stock anyway can be interpreted as a signal of high confidence in the company. This is why, in addition to using hedge fund filings to develop investing strategies, we also maintain a database of insider purchases and take a brief look at significant insider buys to help investors decide if the company is worth further research. Thus, in this article, I will look into five interesting insider purchases that occurred since the start of 2014.
The first transaction I would like to refer to occurred on Jan. 2nd. On the first working day of the year, Michael Dailey, Board Director at Zix Corporation (NASDAQ:ZIXI) acquired 597 shares of the company’s Common Stock. He paid $4.50 per share, and now owns 12,597 shares. Although a bet as small as his last one does not inspire the largest of confidences in the company, you should note that Dailey has been consistently adding shares to his holding every month since May of 2013, when he started a position in the stock.
The day after – Jan. 3rd– Robert Mcdonald, Board Director at United States Steel Corporation (NYSE:X) started a position in the company’s stock. Through four different transactions, he procured a total of 2,000 shares of the company. He paid $29.838 for the first 100 shares, $29.8378 for each of the following 200, and $29.8365 each, for an extra 800 shares. In addition, he got 1,000 shares of Common Stock under the terms of the company’s Non-Employee Director Stock Plan.
Insider activity at United States Steel Corporation (NYSE:X) did not stop there, however. Last week, on Jan. 15th, at least 11 board directors bought stock from the company at $29.50 per share. Although the nature of these transactions was not specified at the SEC filings, which means we cannot know if they were a part of some kind of director compensation plan (or something similar), the fact that almost a dozen insiders are betting on the company´s growth cannot be a bad sign, especially as they all paid full-price for the stock, and bough, at least, 3,300 shares each. Even though the outlook for the general steel industry looks complicated in the U.S., analysts expect United States Steel Corporation (NYSE:X) to outperform its competitors over the long-term, so their bets do not seem unwise.
On the second week of 2014, on Monday, Jan. 6th, Anne-Marie Ainsworth, President, Chief Executive Officer and Board Director at Oiltanking Partners LP (NYSE:OILT) filed a Form 4 report with the U.S. Securities and Exchange Commission, declaring a purchase* of the company’s stock. The insider acquired 1,000 shares at prices ranging from $62.20 to $62.46 per common unit (the weighted average price was of $62.37 per share). She now owns 13,000 shares of Oiltanking Partners LP (NYSE:OILT), worth more than $800,000 at the current stock price.
I should highlight that Ainsworth’s last purchase is not the first one this year. Au contraire, she entered a unit purchase plan, which meant that she started increasing her participation in the company every month since Feb. 2013, augmenting her holdings by more than 10,000 shares. Another insider betting on the company is David Griffis, Board Director, who entered this plan even earlier, in Jan. 2012, and has been increasing his position in the stock ever since.