Investors have been keeping track of insider trading metrics for decades. After all, corporate insiders tend to have a natural edge over retail investors or analysts when it comes to trading their company’s shares, as insiders usually has a better understanding of their businesses and respective industries than anyone else. Hence, retail investors are always a step behind those “in the know” regardless of how much research you do or how much financial news you read.
If only retail investors could attend a company’s board meeting, they could find out what is really going on behind the scenes. Insider buying metrics have been used as a sign of stock price appreciation for years. On the contrary, insider selling is mostly interpreted as a bearish sign. Indeed, insider buying and selling activity should not be used as the sole indicator when making decisions of buying or selling a company’s stock. Nonetheless, legitimate insider trading could represent a good starting point to further investigate a company’s fundamentals. With that in mind, let’s proceed to the discussion of a set of noteworthy insider transactions reported with the SEC on Friday.
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CEO of Struggling Beauty Products Firm Buys Shares – Cluster of Buying Looms
Shortly after Coty Inc. (NYSE:COTY)’s Chief Legal Officer, Greene McMullen, acquired a 40,500-share stake a little bit more than a week ago, the man in charge of the company also piled up some shares. Chief Executive Officer Camillo Pane bought 36,270 Class A shares on Wednesday and 36,080 shares on Thursday at prices varying from $18.42 to $19.91 per share. Mr. Pane currently owns an aggregate of 287,657 shares following these purchases.
The shares of the beauty-product maker have fallen by 34% in the past year, with the recent spike in insider buying coming after the firm’s second-quarter results were released and put additional pressure on the stock. Coty Inc. (NYSE:COTY) said the soft results for quarter that ended December were caused by competitive pressure in the consumer beauty market and “distraction” from the process of absorbing the acquisition of Procter & Gamble Co (NYSE:PG)’s global fine fragrances, salon professional, cosmetics and retail hair color businesses, along with select hair styling brands. The acquisition of P&G Beauty Brands, which brought brands such as CoverGirl under Coty’s umbrella, resulted in higher-than-expected inventory. Ric Dillon’s Diamond Hill Capital upped its position in Coty Inc. (NYSE:COTY) by 53% during the December quarter to 9.88 million shares.
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Let’s head to the second page of the insider trading article, where we briefly analyze some insider buying at two other companies.