Keeping tabs on insider trading behavior can be an important aspect of an investors’ stock analysis process, as past research shows that insiders’ actions in the open market can offer an accurate reflection of their companies’ prospects, as well as their respective industries’ prospects. Intuitively, this makes perfect sense. At the end of the day, corporate insiders possess a broad set of skills and characteristics that could be used to describe the “value-oriented” type of investors.
For instance, Board members and executives have extensive knowledge of their companies and industries, have a tendency to employ a contrarian approach to investing, as well as have a tendency to maintain a long-term perspective. For that reason, insider trading activity, especially insider buying, represents a valuable source of information for long-term-oriented investors. As legendary investor Peter Lynch once said, corporate insiders may sell shares of their own companies for a variety of reasons such as estate planning or diversification, but there is only one reason they buy – they believe the price is going up. By examining the Form 4 filings submitted with the SEC on Thursday, Insider Monkey identified a set of noteworthy insider transactions at five U.S. publicly-traded companies that might be of interest to the investment community.
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Newly-Appointed Member at Organic-Food Producer Initiates Stake
A freshly-appointed member of SunOpta Inc. (USA) (NASDAQ:STKL)’s Board of Directors acquired a new stake earlier this week. Board member Albert D. Bolles purchased a new stake of 40,000 shares on Thursday at prices ranging from $7.30 to $7.40 per share, aligning his interests with those of other shareholders in a good faith gesture.
In early-October, SunOpta Inc. (USA) (NASDAQ:STKL) announced an agreement with private equity investor Oaktree Capital Management, pursuant to which the investment management firm invested $85 million in SunOpta in the form of exchangeable preferred shares. As part of the deal, the company that provides organic ingredients like grains, nuts and fruits to organic-food producers appointed two Oaktree-nominated Independent Directors, one of which was Dr. Bolles. SunOpta used the proceeds from Oaktree to reduce its second lien debt and increase its financial flexibility. In partnership with representatives of Oaktree and representatives of another shareholder, the organic-food company has been conducting a review of its operations, management and governance. The shares of SunOpta are 6% in the green this year after having gained an impressive 55% in the past six months. Glenn W. Welling’s Engaged Capital, the other shareholder that is assisting the company with the review, was the owner of 6.43 million shares of SunOpta Inc. (USA) (NASDAQ:STKL) at the end of September.
Let’s move on to the next page of this article, where we’ll discuss fresh insider buying observed at two other companies.