Stock market downturns like the one we’ve experienced this month provide the perfect opportunity for investors to take advantage of depressed prices (the prices aren’t sad, don’t worry, they’re just lower) and buy shares at discounts to what they traded at just days earlier.
Company insiders are some of the savviest investors when it comes to taking advantage of such drawbacks in the shares of their companies and buying them at the most opportune moments, when they’ve likely hit rock-bottom. Basically, paying attention to these signals is good, so you should do it.
In this article, we’ll check out the recent insider buying at three companies whose shares have been battered and bruised recently and which can still be had for a sizable discount.
At Insider Monkey, we track insider trading and hedge fund activity to uncover actionable patterns and profit from them. We track over 600 of the most successful hedge funds ever in our database and identify only their best stock picks. Hedge funds are like many other companies in that they bundle products (in this case, stock picks) together and sell them to customers (investors) as a package deal. That means you get their 73rd-best pick along with their best pick, and who wants to pay exorbitant fees for a fund’s 73rd-best idea when you could instead invest in only their best ideas? Our newest quarterly stock picks were released this month, which investors can gain access to by becoming a subscriber to Insider Monkey’s premium newsletters.
Aimmune Therapeutics Inc (NASDAQ:AIMT)
Insider Buying Frenzy: Aimmune Therapeutics’ recent public offering allowed four different insiders to pounce on shares of the company, which is developing medications to combat food allergies. CFO Eric Bjerkholt purchased 3,125 shares, while Directors Kathryn Falberg, Mark Iwicki, and Patrick Enright purchased a total of 54,968 shares. All of the shares were purchased on February 26 for the public offering price of $32 each.
Aimmune Therapeutics Inc (NASDAQ:AIMT) Runway Extended to 2020: Thanks to the capital raised through the aforementioned public offering of 5.5 million shares, Piper Jaffray analyst Charles Duncan states that the company’s runway has been pushed to 2020, which will alleviate some of the pressure from the company’s ongoing trials of its intriguing peanut allergy treatment AR101.
AR101 Impresses in Phase 3 Study…: A recent phase 3 trial of AR101 successfully met its endpoint, with more than 50% of young peanut allergy sufferers being able to tolerate a 1,000 mg dose of peanut protein. It sucked to be the control arm in this case, as only 2.4% of the kids that were given placebos rather than AR101 tolerated the same dose of peanut protein.
…Until It Doesn’t: However, while shares surged by as much as 20% early on February 20 following the release of the trial data, they ended the day down and have fallen even further since. Investor worries appeared to swell over the drug’s safety, given that 2.7% of the study participants had a systemic hypersensitivity reaction to the drug. Several analysts have been shocked by the selloff, claiming the results were better than expected (much better in some cases).
Hedge Fund Ownership of Aimmune Therapeutics Inc (NASDAQ:AIMT): 17 hedge funds within Insider Monkey’s database of 663 active hedge funds were shareholders of Aimmune at the end of 2017, an increase of two since September 30, 2017.
On the next page we’ll look at two more companies with notable insider buying activity.
Tile Shop Holdings Inc (NASDAQ:TTS)
Insider Buying Frenzy, The Sequel: Three of the company’s Directors (Peter Kamin, Peter Jacullo III, and Todd Krasnow) have executed dozens of trades in recent days that have seen them buy hundreds of thousands of shares, though the bulk of them were bought for trusts that are managed by Kamin and Jacullo III. Those shares are considered to be indirectly owned. Meanwhile, Todd Krasnow purchased 20,000 shares on February 22 at an average price of $5.55.
Q4 Results Decimate Tile Shop Holdings Inc (NASDAQ:TTS): The insider buying surge follows a 35% slump in the stock over the past few days, following the release of sobering fourth-quarter results (warning: may not work to actually sober you up). Revenue of $78.58 million and a $0.05 loss per share both widely missed estimates, while same store sales dropped by 4.9%. Floor & Decor Holdings Inc (NYSE:FND) appears to be one of the prime culprits in the case of the missing Tile Shop sales, as it announced an expected 24.4% same store sales increase for the fourth-quarter in early-January.
Tile Shop Holdings Inc (NASDAQ:TTS) Headed in New Direction: With Tile Shop losing ground to cheaper competitors, the company appears ready to shift its strategy towards the high-end of the tile market, saying its 2017 strategy was flawed and that its pricing strategy may have alienated its Pro customers. The company’s founder, Bob Rucker, has taken over as interim CEO following the resignation of former CEO Chris Homeister in November.
Hedge Fund Ownership of Tile Shop Holdings Inc (NASDAQ:TTS): There was a 46% rise in hedge fund ownership of Tile Shop during Q4, with Peter Muller’s PDT Partners (276,300 shares) and Neil Chriss’ Hutchin Hill Capital (82,800 shares) among the funds opening Tile Shop positions during the quarter.
U.S. Silica Holdings Inc (NYSE:SLCA)
Who Bought Shares: Director Diane Duren (say that five times fast)
How Many Shares Were Bought: 10,000 @ $25.96 average price per share
Date of the Transaction(s): February 26
U.S. Silica Holdings Inc (NYSE:SLCA) Selloff Overdone?: The insider’s purchase came just a few days after shares of U.S. Silica were battered by 20% following the release of the company’s Q4 results, which included guidance for the current quarter being slashed. While Morgan Stanley did trim its price target on the stock to $47 from $52 (still plenty of upside potential), it said the selling was overdone and raised its 2019 EBITDA outlook for the company by over 25% to $590 million.
Hedge Fund Ownership of U.S. Silica Holdings Inc (NYSE:SLCA): 21 hedge funds in our database owned 17.4% of U.S. Silica’s outstanding shares at the end of 2017. Point72 Asset Management, headed by billionaire Steve Cohen, raised its already large stake in the company by 68% to just under 1.6 million shares in the fourth-quarter. Anand Parekh’s Alyeska Investment Group also loaded up on U.S. SIlica shares in Q4, 691,192 of them to be exact.