U.S. Silica Holdings Inc (SLCA), Verastem Inc (VSTM), More: Insider Buying Clusters Could Signal Future Gains

Insider buying and selling spiked last week after sinking the week before. After a huge jump to yearly highs in early September, insider buying has cooled off, though the 136 purchases made on October 2 was a 2018 high. Insiders sold $1.22 billion worth of stock last week, nearly ten-times the amount that insiders purchased ($124 million).

In the past two weeks, several companies’ shares were purchased by multiple members of their leadership teams. Such clusters of insider buying tend to signal stocks that will outperform the market over the following 12-month period, which makes them savvy plays for any investor. We’ll take a look at the recent clusters of insider buying witnessed at Verastem Inc (NASDAQ:VSTM), Arlington Asset Investment Corp (NYSE:AI), and U.S. Silica Holdings Inc (NYSE:SLCA) below.

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Verastem Inc (NASDAQ:VSTM)

It’s been a veritable feeding frenzy for Verastem Inc (NASDAQ:VSTM) shares among the company’s officers and directors in recent days. Since September 27, no less than six members of the company’s executive team have purchased shares. Among them were EVP & CCO Joseph Lobacki (3,000 shares), COO Dan Paterson (5,000 shares), President & CEO Robert Forrester (12,500 shares), and Directors Brian Stuglik (1,000 shares), Timothy Barberich (5,000 shares) and Michael Kauffman (4,000 shares).

After pushing past the $10 mark in late August, Verastem Inc (NASDAQ:VSTM) shares have sunk by over 30% since, which precipitated the insider buying surge. Despite the recent setback, Verastem shares are still more than double what their value was at the start of 2018. Just ahead of that insider buying, Verastem’s Copiktra (duvelisib) became the company’s first treatment to be approved by the FDA. Rather than rejoice, investors grew cautious, as Verastem must now undertake the daunting task of meeting sales expectations against competing drugs from heavyweights like Bayer and Gilead Sciences, Inc. (NASDAQ:GILD). Verastem Inc (NASDAQ:VSTM)’s leadership certainly appears to be confident of their prospects, which should likewise embolden investors.

On the next page we’ll look at two other companies where multiple insiders have been buying shares recently.

Arlington Asset Investment Corp (NYSE:AI)

Two of Arlington Asset Investment Corp (NYSE:AI)’s leading executives each purchased 10,000 shares of the company on October 3. President and CEO J. Rock Tonkel, Jr., who joined the company in 2007 as its President and COO, owns 359,115 shares after his 10,000-share purchase. Equaling his share purchase was Executive Chairman Eric F. Billings, who co-founded Arlington Asset in 1989. Mr. Billings now owns 242,759 of Arlington. Asset.

The $256 million investment company has sunk to just $8.90 per share, a decline of over 10% since September 27, when it began trading ex-dividend. That has pushed the company’s forward yield to an eye-bulging 16.80%. While Arlington Asset lost $0.13 per share in Q2, earnings were $0.59 per share when adjusted for non-recurring costs. The big question is whether Arlington Asset Investment Corp (NYSE:AI) will need to cut its quarterly dividend further in 2019 following a 31.8% reduction to $0.375 announced in June.

U.S. Silica Holdings Inc (NYSE:SLCA)

Five members of U.S. Silica Holdings Inc (NYSE:SLCA)’s leadership purchased shares of the sands and minerals supplier towards the end of September. U.S Silica’s EVP & Chief Commercial Officer Bradford B. Casper purchased 1,500 shares, while EVP & Chief Financial Officer Donald A. Merril acquired 500 shares to lift his ownership to 27,377 shares. Directors William Jennings Kacal (10,000 shares) and Michael J. Stice (5,414 shares) increased their ownership in the company, while President and CEO Bryan Adair Shinn did the same, buying 2,000 shares to lift his stake in the company that he leads to 126,243 shares.

Shares of U.S. Silica Holdings Inc (NYSE:SLCA) have steadily trended downward since mid-May and have lost over 40% since the start of the year. Investors are concerned that softening demand for frac sand will put pressure on prices over the next year. Fellow frac sand supplier Hi-Crush Partners LP (NYSE:HCLP) announced on September 26 that it would idle dry plant operations at its facility in Whitehall due to soft demand which the company characterized as being temporary. Shares of both Hi-Crush and U.S. Silica Holdings Inc (NYSE:SLCA) lost over 7% of their value on the news.

Disclosure: None