In February 2016, as bank stocks hit new lows, JPMorgan Chase CEO Jamie Dimon dove in with a $26 million open market stock purchase of JPMorgan’s stock.
Other bank insiders followed suit that year and continued to buy in 2017.
It was a sign that the financial stocks were cheap.
Quietly, in 2018, the insiders of another sector have been equally as enthusiastic: the energy insiders.
Do you know who Joseph Foran is?
He’s the CEO of Matador Resources, an oil and natural gas exploration and production company.
On four different occasions beginning on Nov 23, 2018 and ending on Dec 11, 2018, Foran bought shares of Matador totaling $169,860 as the shares plunged over 42% from the beginning of October through Dec 11.
He wasn’t the only Matador insider to buy.
From Nov 11 to Dec 14, 2018, 18 Matador insiders bought stock as it tumbled down. This included the CFO, Executive Vice Presidents and directors.
What did Foran and the other Matador insiders know last year?
The shares have rebounded in 2019, gaining 13.6% year-to-date.
Energy Insiders Went on a Buying Spree in 2018 as Crude Plunged
But he wasn’t the only energy company insider to buy in 2018.
There was a huge cluster buy at Encana. In November and December 2018, over a dozen insiders including the CEO, CFO, General Counsel and directors all jumped in to buy as the shares took a dive as crude fell.
The shares have rebounded in 2019 and are up 5.7% year-to-date.
There were also insider buys at other exploration and production companies such as Berry Petroleum and Parsley Energy, which are up 24% and 12%, respectively, year-to-date.
More . . .
When in-the-know officers dip into their own pockets to buy shares of their own company, there’s only one reason: They expect the stock price to go up.
Zacks is now targeting insider moves that include a CEO who just bought $1 million of stock in his medical technology company, even though he already owns half a million shares and an energy company so confident that it announced a $100 million share buyback program.
Our recommended insider trades are normally closed to public view – but you can gain access until midnight Sunday, February 17.
Insider Buying Sends a Strong Signal
Why would these CEOs and corporate insiders spend so much of their money on their own companies’ stock when they already own a ton shares already?
Pure and simple.
The opportunity to make more money motivates people- even people who are already millionaires like Jamie Dimon.
If top insiders are buying, it’s because they know something very good is going on at the company. Maybe it is a new product. Or contract. Or pending merger.
Whatever the reason, they are very confident that shares will be on the rise. After all, who would buy more stock in a company if they knew it was sinking???
Buy When the Insiders Buy
When high level insiders buy, they are required to report the purchases to the SEC within 48 hours of the trade. The trade then becomes public information.
Hedge funds and other professional investors routinely use this information to get an edge on their trades.
For most of us, though, it’s not easy to get access to the insider information. While the media will trumpet huge insider buys like Dimon’s $26 million buy, did you hear anything about the Matador CEO’s 4 insider purchases?
The challenge is getting easy and reliable access to all the insider trades and then figuring out which ones to buy.
Where to Find the Insider Buys
Anyone can go on the SEC website and get the insider trading information but it’s time consuming to search by individual companies.
Some investment firms collect the insider buying data and can provide it to you as a weekly list. Have you ever seen one of those lists? The sheer number of companies can be overwhelming.
In some instances, the insiders have been known to buy en masse. Then what’s an investor to do?
This happened during the stock market dip in August 2011. As stock prices fell, insiders felt that their companies were undervalued and rushed out to buy shares.
That August, insiders bought stock in 50 different S&P 500 companies in just one week. Even if you got a list of those stocks, how would you narrow it down to the stocks that were truly worth buying?
To solve this problem, our Zacks research team developed a strategy that monitors selected insider buying activity at companies that already show strong earnings and excellent valuations. We do the work of sifting through all the insider buys so you don’t have to.
Just a handful of stocks meet the demanding criteria of our Zacks’ Insider Trader. Right now, we’ve narrowed it down to 7 insider buys that make the grade.
The portfolio is normally closed to public access and closes again this Sunday. But today I’m inviting you to look into it and see our live recommendations with strong fundamentals and substantial upside.
One of the insider buys is a medical technology firm where the CEO snapped up $1 million of shares in his first open market purchase since joining the company in 2011. The CFO also added more than $250,000 in her first buy since coming onboard.
Just for exploring our insider picks, you may download Zacks’ Special Report, 5 Stocks Set to Double free of charge. These 5 buy-and-holds offer an enticing balance to our more active Insider Trader moves. Each is the #1 favorite of a Zacks expert for its potential to jump +100% or more over the next year.
Important: Your chance to access the Insider Trader portfolio and Special Report is temporary. The number of investors who see these recommendations must be limited. The portfolio closes again to entry Midnight Sunday, February 17.
Tracey Ryniec, Zacks’ insider and value strategist, is Editor in Charge of the Zacks Insider Trader.