Insider Buying Roundup: Elon Musk Buys Tesla (TSLA) Shares After Earnings Call Backlash

Tesla Motors Inc (NASDAQ:TSLA) CEO Elon Musk has made amends with investors of his company after a poorly handled earnings call last week sent shares of the electric automaker tumbling. Musk bought 33,000 Tesla shares on Monday in a series of purchases that lifted his indirect ownership of Tesla to just under 33.64 million shares. Despite being a drop in the bucket in terms of his overall share ownership, the purchases cost nearly $10 million.

The purchases also revealed the story of how Tesla Motors Inc (NASDAQ:TSLA) performed on the stock market on Monday, as they were made at increasingly higher prices throughout the day as the stock continued to rise, partly on the back of those very purchases. The first purchase, of 5,903 shares, was nabbed at an average price of $295.03. By the eighth and final purchase of the day, the average price per share of the transaction had jumped to $302.13, with shares of Tesla gaining 3% on the day.

Tesla shares have fully recouped the 5% losses they suffered last Thursday over the past two trading days. Those losses were sparked by a bizarre earnings call that day in which Musk shot down two analysts’ questions related to the company’s financial situation as “boring”, “boneheaded”, and “dry”. That left the media to speculate as to whether Musk was cracking under the pressure of meeting Tesla’s own lofty expectations and was himself growing concerned about the company’s financial health.

Musk began damage control the next day, tweeting that the questions were from sell-side analysts trying to push a short thesis, and claiming that he could’ve handled the situation better. Shorts have been pushing hard against Tesla’s bold growth story for years to no avail, and that activity only picked up steam following the earnings call, with nearly a million additional shares being shorted since then, pushing the total to nearly $12 billion being bet against the company.

Hedge funds have likewise been wary of Tesla for years, with several prominent names in the industry, including Jim Chanos, being vocal critics of the company and its nosebleed valuation. We’ve developed a market-beating system that invests in the consensus picks of the top 100 best performing hedge funds every quarter. This “Best Performing Hedge Funds Strategy” gained 4% last quarter vs. a loss of 1% for the S&P 500 ETF (SPY). Since its inception in May 2014 this strategy’s picks have returned 74.4% vs. 49.7% for the SPY. You can see our latest picks by trying our newsletters free of charge for 14 days.

On the next page we’ll check out the recent insider buying at two other companies.

Ameriprise Financial, Inc. (NYSE:AMP)

Who Bought Shares: EVP & CFO Stanley Berman

How Many Shares Were Bought: 3,728 @ $134.12 per share

Date of the Transaction(s): May 2

This transaction represented the first insider purchase at Ameriprise Financial, Inc. (NYSE:AMP) in over a year-and-a-half and comes amid a turbulent time for the company and its shareholders. Those shares have lost over 20% of their value this year, which has prompted shareholder backlash over the company’s generous executive compensation plan amid declining results.

A nonbinding shareholder vote held during the company’s annual shareholder meeting in late-April resulted in 75% of votes going against its 2017 executive compensation, a year in which CEO James Cracchiolo enjoyed realized pay of over $60 million. That represented a massive shift from past votes, which passed with over 80% support in each of the previous four years.

Also last month, former Ameriprise financial advisor Li Lin Hsu was arrested on fraud charges after she allegedly bilked investors out of $2 million over a five-year period which began while she was still being employed by the company (she was terminated in 2015).

Incyte Corporation (NASDAQ:INCY)

Who Bought Shares: CEO Herve Hoppenot

How Many Shares Were Bought: 15,000 @ $60.94 per share

Date of the Transaction(s): May 2

We come lastly to Incyte Corporation (NASDAQ:INCY), a biopharmaceutical company whose shares have tumbled by 38% in 2018. The latest blow to the stock came last week when the company’s first-quarter earnings and revenue both missed analysts’ estimates. That prompted CEO Herve Hoppenot to buy 15,000 shares in the middle of last week, raising his position to 276,690 shares.

More important than the missed earnings results was the company’s failed drug trial of epacadostat in combination with Merck & Co. Inc. (NYSE:MRK)‘s Keytruda, for the treatment of melanoma. Those results were announced in early-April and sent Incyte’s shares crashing by 23%. The early results of epacadostat in combination with other treatments had fueled a huge push for Incyte’s stock in late-2016/early-2017, as analysts had projected that the drug could pull in $3 billion annually by 2022. While other combinations could still prove effective, the failed combination was seen as one of the strongest, which doesn’t bode well for the results from other combination trials involving epacadostat, of which there are over two dozen.

Disclosure: None