Insider purchases consistently outpaced insider sales during much of October, the first time that has happened over a minimum two-week period since January 2016. With the stock market having one of its worst months since the great recession (the Nasdaq for example, slid by 9% during October, its worst month since November 2008), it’s not surprising that more and more executives were buying cheap shares and hanging on to their discounted ones.
Investors appear to be wary of the possibility that the U.S and global economy has peaked, which could instantly make a lot of stocks look overvalued if growth projections start tapering off. The U.S/China trade war continues to plod along as well, which prompted the IMF to cut its 2019 growth forecasts for both countries in early-October.
Insider trading represents an important gauge of the market’s overall sentiment, as demonstrated by the noteworthy October downtrend when it came to insider selling. Even more importantly, insider trading (namely insider buying) provides valuable insights when it comes to individual companies. Whereas it’s hard to draw conclusions from insider selling of any kind, insider purchases send a clear signal that one or more members of a company’s management team believe shares to be undervalued. And history has shown that stocks which have experienced such insider purchases outperform the market over the following 12-month period.
Alongside our tracking of insider trading activity, we also track the top consensus picks of the best performing hedge funds each quarter and share them exclusively with our newsletter subscribers.
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Below and on the following pages, we’ve ranked the 25 Biggest Insider Purchases in October, all but one of which topped $100,000 in value. We’ll detail those transactions and check out what may have prompted the insider buying activity in each stock. Note that the list does not include insider purchases made through trading plans or which constitute indirect purchases of stock (usually made through trusts or other investment vehicles). Insider purchases made by large shareholders (often hedge funds which have a seat on the company’s board) likewise aren’t considered.
25. Arlington Asset Investment Corp (NYSE:AI)
Who Bought Shares: President and CEO J. Rick Tonkel Jr.
How Many Shares Were Bought: 10,000 @ $8.79 per share
Date of the Transaction(s): October 3
Arlington Asset Investment Corp (NYSE:AI) shares fell by over 10% between September 26 and October 2, primarily due to the stock going ex-dividend on September 27, which prompted this insider purchase by the company’s leading executive. Arlington Asset’s shares carry a ridiculous forward yield of 17.84%, despite a 31.8% cut to the company’s quarterly dividend payments in June.
