Investing

These Biotechs and IPOs Inspire Big Insider Buying

Trey Thoelcke

Published: April 28, 2024 8:15 am

As tech giants and other sector leaders report their most recent quarterly results, one might expect notable insider purchases to be scarce. However, a couple of initial public offerings and a secondary offering inspired insiders to pick up some shares. Two of the companies featured here had management changes, and half of them are biotech firms.

A well-known adage reminds us that corporate insiders and 10% owners really only buy shares of a company because they believe the stock price will rise and they want to profit from it. Thus, insider buying can be an encouraging signal for potential investors. This is all the more so during times of uncertainty in the markets, and even when markets are near all-time highs.

Remember that with a new earnings-reporting season underway, some insiders are prohibited from buying or selling shares. Below are some of the more notable insider purchases that were reported in the past week or so.

Ibotta

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• Buyer(s): 10% owner Clark Jermoluk Founders Fund I
• Total shares: almost 568,200
• Price per share: $88.00
• Total cost: about $50.0 million

This buyer took advantage of the Ibotta Inc. (NYSE: IBTA) initial public offering. The Denver-based provider of promotional services to publishers, retailers, and advertisers was founded in 2011 and was formerly known as Zing Enterprises. So far, shares have traded for $93.15 to $110.49 apiece, well above the buyer’s purchase price. Meanwhile, some officers parted with more than 245,000 shares altogether at the IPO price.

RXO

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• Buyer(s): 10% owner MFN Partners
• Total shares: over 1.3 million
• Price per share: $18.93 to $19.47
• Total cost: almost $26.3 million

This North Carolina-based transportation company is set to release its first-quarter results in the coming week. The beneficial owner returned to the buy window ahead of the report, after acquiring more than 41,100 RXO Inc. (NYSE: RXO) shares for over $20 apiece the week before. It also made purchases back in February and late last year. Despite that owner’s show of faith, the share price is almost 13% lower than 90 days ago. And the $20.40 consensus price target suggests there’s not much room for the stock to rebound. Analysts on average recommend holding shares.

Biohaven

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• Buyer(s): CEO Vlad Coric and two other directors
• Total shares: over 391,300
• Price per share: $39.13 to $41.00
• Total cost: around $16.0 million

Connecticut-based biotech Biohaven Ltd. (NYSE: BHVN) had a public offering of common shares. Coric picked up about $5 million worth of those shares, boosting his stake to almost 1.8 million shares. The stock was last seen changing hands for less than the $41 offering price, after falling more than 30% in the past month. However, it is still over 187% higher than a year ago. The consensus price target is up at $59.63. Reaching that target would be a gain of more than 54%. All five analysts who follow the stock recommend buying shares.

EyePoint Pharmaceuticals

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• Buyer(s): 10% owner Cormorant Asset Management
• Total shares: almost 581,800
• Price per share: $17.36 to $19.06
• Total cost: nearly $10.5 million

This Massachusetts-based biotech is focused on treatments for the eye. EyePoint Pharmaceuticals Inc. (NASDAQ: EYPT) appointed a new chief medical officer and it posted better-than-expected fourth-quarter results last month. Shares have retreated more than 24% in the past month and were last seen trading below the purchase price range above. The $43.67 consensus price target indicates that analysts think the stock could rise about 160% in the next year. The buyer’s stake is up to more than 7.4 million shares.

Also see which biotech stock plunged 20% but Wall Street expects a 195% recovery.

Zura Bio

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• Buyer(s): two directors and an executive
• Total shares: more than 1.3 million
• Price per share: $3.13
• Total cost: over $4.2 million

Earlier this month, Zura Bio Ltd. (NASDAQ: ZURA) president and chief operating officer stepped up to take the reins from the company’s departing founding chief executive. Shares of the Nevada-based clinical-stage biotechnology company have popped more than 50% in the past month, after falling to a 52-week low on disappointing quarterly results. The stock is still 22% or so lower than at the beginning of the year, but it was last seen trading for more than the purchase price above. Note that the consensus price target is all the way up at $16.40.

Centuri

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• Buyer(s): CEO William Fehrman and several others
• Total shares: more than 137,100
• Price per share: $21.00
• Total cost: almost $2.9 million

These insiders bought into the Centuri Holdings Inc. (NYSE: CTRI) initial public offering. Fehrman picked up 25,000 shares of the utility infrastructure services provider, but the biggest buy was 71,400 shares by one director. Note that Centuri was spun off from Southwest Gas Holdings Inc. (NYSE: SWX), and Fehrman was previously CEO of Berkshire Hathaway Energy. Centuri stock’s post-IPO trading range of $23.15 to $25.60 is above the offering price.

And Other Insider Buying

Source: Roman Tiraspolsky / Getty Images

In the past week or so, some insider buying was reported at Citi Trends, FNB, Lovesac, MasterCraft Boat, Regions Financial, Rocket Companies, Sunoco, and Westamerica Bancorp as well.

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