Insider buying: Most investors misunderstand the term insider trading. Of the thousands of SEC-filed transactions that corporate insiders engage in every year, just a few are deemed illegal by federal prosecutors. Within this universe of legal insider trades, it’s much more important to track insider buying versus selling activity.
As the old adage goes, there are many reasons for an exec to sell shares of his or her company, but only one, very bullish reason why they would buy (discover how some investors beat the market by following insiders). With that being said, let’s take a look at some of the most important insider buys over the past week.
Last Tuesday, the CEO and CFO of Scotts Miracle-Gro Co (NYSE:SMG) both reported purchasing shares of their company’s stock at an average price near $49.50. CEO James Hagedorn increased his direct stake in Scotts ever so slightly to 35,000 shares, and Executive VP/CFO Lawrence Hilsheimer bought at a similar price to increase his holdings to almost 1,000 shares. Since the day both insider buys were reported publicly, shares of Scotts are up 1.5%, and both execs have already booked a 12% gain on their latest trades.
Cable software provider BroadSoft Inc (NASDAQ:BSFT), meanwhile, saw board member Charles L. III snatch up more than $17,000 worth of his company’s stock last week. The director’s position in BroadSoft is now worth more than $350,000 at current market prices, and his latest trade marks his sixth buy since May. In March of this year, fellow director John Markley Jr. bought in when BroadSoft traded near $23 a share; the stock closed last week above the $36 mark.
In another bout of insider bullishness, Pulaski Financial Corp (NASDAQ:PULB) saw three board members buy stock at an average purchase price near $10.20 a piece. Shares of the small-cap bank holding company were up almost 3% last week on the news. Generally speaking, the greatest potential for market outperformance occurs when three or more insiders buy shares within a period of a few months. With multiple buys in the span of one day, Pulaski Financial is worth watching very closely moving forward.
In terms of sheer size, though, Copart, Inc. (NASDAQ:CPRT) takes the cake. Multiple Form 4 filings with the SEC recently revealed several purchases made by Willis J. Johnson, Chairman of the Board, and John Lindle, the Special VP of Strategic Growth for the company. The former, who originally founded Copart and served as its CEO between 1982 and 2010, bought more than $20 million worth of Copart stock in four separate transactions over the past two weeks. The total value of Johnson’s reported position in Copart now exceeds $240 million and comprises a stake of more than 7% in the company. Lindle, meanwhile, owns a little under $500,000 worth of shares following his latest move.
TriQuint Semiconductor (NASDAQ:TQNT) is another name with some insider buying activity surrounding it. The RF technology company has seen its shares pop 4% over the past week in step with VP Timothy Dunn’s reveal that he bought 10,000 shares of TriQuint stock at $4.55 in late February. Dunn’s dated disclosure indicates that he’s made an 86% gain on the trade in a little under eight months. Fellow insider Todd Debonis also reported that he now owns over 18,000 shares of TriQuint valued at close to $160,000.
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