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Insider Buying Alert: CEOs Are Buying These 10 Stocks

In this article, we will take a detailed look at Insider Buying Alert: CEOs Are Buying These 10 Stocks. If you want to skip our detailed analysis and see the top 5 stocks in this list, click Insider Buying Alert: CEOs Are Buying These 5 Stocks.

CEOs sitting at the helm of affairs with informational advantage are often tempted to buy or sell shares of their company ahead of events with potential impact on stock prices. CEOs doing illegal forms of insider trading has become common over the past several years.

Examples of CEOs Doing Illegal Forms of Insider Trading From Recent History

Last month, Dutch soccer club AFC Ajax NV suspended its CEO Alex Kroes, saying it found “strong indications” that the executive was involved in insider trading. The club accused Kroes of buying more than 17,000 shares of the club just a week before his appointment.

In March, the SEC alleged in a lawsuit that Andy Bechtolsheim, the billionaire co-founder of Sun Microsystems Inc. and Arista Networks Inc., illegally traded on Cisco’s $2.6 billion offer to buy Acacia Communications Inc. as he learned about the deal in advance.

Shadow Trading

Biotech executive Matthew Panuwat was working at biopharma company Medivation back in 2016. He received information that Pfizer was interested in buying his company. Panuwat did something that was new in the insider trading world — instead of buying his own company shares to profit from the Pfizer deal, he bought call options on Medivation rival Incyte Corporation. Panuwat’s idea, according to the SEC’s lawsuit, was to profit from  Incyte stock gains when the Pfizer-Medivation deal news would become public. That’s exactly what happened when Pfizer announced to buy Medivation for $14 billion. Incyte shares jumped and Panuwat pocketed $120,000 in profit. The SEC later won its case as the jury agreed with the body’s claims that this kind of insider trading – labeled as shadow trading – is also illegal.

What Can Outsides Learn from Legal Insider Trading Activities of CEOs

But it’s not always illegal for CEOs to buy or sell their company shares. In fact, founders and CEOs are often expected by investors to have skin in the game. An executive buying shares of his company is often seen as a positive sign. But what can outsiders learn and gain by paying attention to CEOs buying their own company shares? Can an average investor make money by tracking stocks CEOs are buying? Researchers have pondered over these questions for decades. One of the hottest research topics in the industry is to find out why CEOs often buy so much of their company stock in addition to the equity they already own via stock offerings, compensation, grants and other means.

Why Do CEOs Buy Their Own Company Shares?

A research paper titled Have the benefits of CEO purchases been understated? says that there is “little empirical evidence” to point to reasons behind CEOs buying their company shares “other than directly profiting from the trade.” Interestingly, the research found that CEOs often pile into their company shares and expose themselves to “idiosyncratic risk” to “prolong” their tenure.

Another interesting but surprising finding of the study said that CEOs who are “net purchases” of their company stock “tend to be shorter-tenured and employed by smaller firms with relatively poor recent stock price and operating performance.”

Investments of Top Executives Generate the Highest Returns

Moving beyond just the CEOs, paying attention to what insiders are doing is generally helpful for investors. A study by Catalyst Capital Advisors says that researchers at Wharton, Harvard, University of Michigan, and University of Chicago found that insiders’ trades beat market indices on average. The study said back-tested data for insider trades from 2003 to 2010 also shows that following insider trades easily beat the market. The study also discussed the returns of insider buying based on different insider identities and said following insider buys of highest executives posts the highest net returns.

“On average, investing by top executives generates the highest net returns while investing by large shareholders generates the lowest net returns. This difference may be explained by the difference in level of understanding by the type of insider about the firm and the market conditions.”

Luis Louro / shutterstock.com

Methodology

For this article we used Insider Monkey’s insider trading stock screener to identify stocks that saw insider buying from their CEOs over the past few weeks. From these stocks we chose 10 companies with the highest amount of insider buying from CEOs in terms of dollar value. Some top names in the list include J B Hunt Transport Services Inc (NASDAQ:JBHT), Hertz Global Holdings Inc (NASDAQ:HTZ) and Skyworks Solutions (NASDAQ:SWKS). Why should you pay attention to insider trading activity? Insider Monkey’s monthly newsletter and portfolio that focuses on activist hedge funds, insider trading and stock picks from hedge fund investor newsletters and conferences returned 199.2% between March 2017 and March 12, 2024 and outperformed the S&P 500 ETFs’ 144.9% gain by more than 54 percentage points.

10. Intrusion Inc. (NASDAQ:INTZ)

Number of Hedge Fund Investors: 3

Texas-based cybersecurity company Intrusion Inc. (NASDAQ:INTZ) ranks 10th in our list of the top stocks with insider buying activity from CEOs. On April 22, Intrusion Inc.’s (NASDAQ:INTZ) CEO Scott Anthony snapped up 585,748 shares of Intrusion Inc.’s (NASDAQ:INTZ) at $1.70 per share. Since then through May 7 the stock has ticked up 0.63%.

Of the 933 hedge funds in Insider Monkey’s database, just three hedge funds had stakes in Intrusion Inc. (NASDAQ:INTZ) as of the end of 2023.

9. Heartland Express, Inc. (NASDAQ:HTLD)

Number of Hedge Fund Investors: 8

Truckload services company Heartland Express, Inc. (NASDAQ:HTLD) CEO Michael J. Gerdin has been piling into his company shares lately.  On May 1 he bought a whopping 107,605 shares of Heartland Express, Inc. (NASDAQ:HTLD) at $10.74 per share. On April 26 he had bought 190,696 Heartland Express, Inc. (NASDAQ:HTLD) shares at $10.11 per share. Since April 26 through May 7 the stock has gained about 5.6%.

Like HTLD, J B Hunt Transport Services Inc (NASDAQ:JBHT), Hertz Global Holdings Inc (NASDAQ:HTZ) and Skyworks Solutions (NASDAQ:SWKS) are also seeing insider buying from CEOs.

8. Lumen Technologies Inc (NYSE:LUMN)

Number of Hedge Fund Investors: 17

Communication solutions, Cloud and networking company Lumen Technologies Inc (NYSE:LUMN) CEO Kathleen E. Johnson on May 2 piled into 750,000 shares of Lumen Technologies Inc (NYSE:LUMN) at $1.28 per share. The net worth of this transaction was $959,850. Since this transaction the stock price is up 4%.

As of the end of the fourth quarter of 2023, 17 hedge funds out of the 933 funds tracked by Insider Monkey had stakes in Lumen Technologies Inc (NYSE:LUMN).

Longleaf Partners Fund stated the following regarding Lumen Technologies, Inc. (NYSE:LUMN) in its fourth quarter 2023 investor letter:

Lumen Technologies, Inc. (NYSE:LUMN) – Global fiber company Lumen was the top detractor for the year, and we sold our position in the first half, when it became clearer the new management team under CEO Kate Johnson would not pursue a strategic path to monetizing Lumen’s consumer business. Lumen represented a permanent capital loss for the Fund, a significant opportunity cost for the portfolio and a disappointing long-term mistake. Lumen has reinforced the importance of limiting overweight positions in the portfolio, being cautious of leverage and value declines, and fully re-underwriting a case – and being willing to move on – when the people and/or underlying facts change.”

7. Macerich Co (NYSE:MAC)

Number of Hedge Fund Investors: 19

California-based REIT Macerich Co (NYSE:MAC) is one of the stocks that saw insider buying activity from CEOs recently. On May 6, Macerich Co’s (NYSE:MAC) CEO Jackson Hsieh piled into 140,000 shares of Macerich Co (NYSE:MAC) at $14.26 per share. On May 6 the stock closed trading $14.68 while as of midday trading May 7, the stock was hovering around $15.21.

Last month Macerich Co (NYSE:MAC) reported Q1 earnings. FFO in the period came in at $0.33, missing estimates by $0.06. Revenue in the quarter fell 2.8% year over year to $208.78 million, beating estimates by $5.26 million.

6. Hexcel Corp (NYSE:HXL)

Number of Hedge Fund Investors: 27

Materials company Hexcel Corp (NYSE:HXL) is one of the stocks that saw insider buying from its CEO. On May 1, Hexcel Corp’s (NYSE:HXL) CEO Tom Gentile bought 15,000 shares of Hexcel Corp (NYSE:HXL) at $66.25 per share. The total value of this transaction is $993,763. Since this transaction the stock has gained about 7%. As of the end of the fourth quarter of 2023, 27 hedge funds tracked by Insider Monkey had stakes in Hexcel Corp (NYSE:HXL). In addition to HXL, J B Hunt Transport Services Inc (NASDAQ:JBHT), Hertz Global Holdings Inc (NASDAQ:HTZ) and Skyworks Solutions (NASDAQ:SWKS) are also seeing insider buying.

TimesSquare Capital U.S. Mid Cap Growth Strategy stated the following regarding Hexcel Corporation (NYSE:HXL) in its fourth quarter 2023 investor letter:

“In the Industrials sector we gravitate toward business service companies, those focused on automation & efficiency improvements, and essential infrastructure services. Hexcel Corporation (NYSE:HXL) develops and produces carbon fibers, structural reinforcements, and composite materials for use in commercial aerospace, space & defense, and industrial applications. The commercial airline industry needs more aircraft to meet increasing demand. Hexcel’s components are included in production assemblies from Boeing and Airbus.”

Click to continue reading and see Insider Buying Alert: CEOs Are Buying These 5 Stocks.

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Disclosure: None. Insider Buying Alert: CEOs Are Buying These 10 Stocks was initially published on Insider Monkey.

AI, Tariffs, Nuclear Power: One Undervalued Stock Connects ALL the Dots (Before It Explodes!)

Artificial intelligence is the greatest investment opportunity of our lifetime. The time to invest in groundbreaking AI is now, and this stock is a steal!

AI is eating the world—and the machines behind it are ravenous.

Each ChatGPT query, each model update, each robotic breakthrough consumes massive amounts of energy. In fact, AI is already pushing global power grids to the brink.

Wall Street is pouring hundreds of billions into artificial intelligence—training smarter chatbots, automating industries, and building the digital future. But there’s one urgent question few are asking:

Where will all of that energy come from?

AI is the most electricity-hungry technology ever invented. Each data center powering large language models like ChatGPT consumes as much energy as a small city. And it’s about to get worse.

Even Sam Altman, the founder of OpenAI, issued a stark warning:

“The future of AI depends on an energy breakthrough.”

Elon Musk was even more blunt:

“AI will run out of electricity by next year.”

As the world chases faster, smarter machines, a hidden crisis is emerging behind the scenes. Power grids are strained. Electricity prices are rising. Utilities are scrambling to expand capacity.

And that’s where the real opportunity lies…

One little-known company—almost entirely overlooked by most AI investors—could be the ultimate backdoor play. It’s not a chipmaker. It’s not a cloud platform. But it might be the most important AI stock in the US owns critical energy infrastructure assets positioned to feed the coming AI energy spike.

As demand from AI data centers explodes, this company is gearing up to profit from the most valuable commodity in the digital age: electricity.

The “Toll Booth” Operator of the AI Energy Boom

  • It owns critical nuclear energy infrastructure assets, positioning it at the heart of America’s next-generation power strategy.
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AI. Energy. Tariffs. Onshoring. This One Company Ties It All Together.

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AI needs energy. Energy needs infrastructure.

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Wall Street is noticing this company also because it is quietly riding all of these tailwinds—without the sky-high valuation.

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The Hedge Fund Secret That’s Starting to Leak Out

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A New Dawn is Coming to U.S. Stocks

I work for one of the largest independent financial publishers in the world – representing over 1 million people in 148 countries.

We’re independently funding today’s broadcast to address something on the mind of every investor in America right now…

Should I put my money in Artificial Intelligence?

Here to answer that for us… and give away his No. 1 free AI recommendation… is 50-year Wall Street titan, Marc Chaikin.

Marc’s been a trader, stockbroker, and analyst. He was the head of the options department at a major brokerage firm and is a sought-after expert for CNBC, Fox Business, Barron’s, and Yahoo! Finance…

But what Marc’s most known for is his award-winning stock-rating system. Which determines whether a stock could shoot sky-high in the next three to six months… or come crashing down.

That’s why Marc’s work appears in every Bloomberg and Reuters terminal on the planet…

And is still used by hundreds of banks, hedge funds, and brokerages to track the billions of dollars flowing in and out of stocks each day.

He’s used this system to survive nine bear markets… create three new indices for the Nasdaq… and even predict the brutal bear market of 2022, 90 days in advance.

Click to continue reading…