Insider Buying: Taking a Controlling Stake in a Struggling Retailer?

Investing

Published: February 18, 2024 11:20 am

The biggest insider trading news of the week may have been Amazon.com Inc. (NASDAQ: AMZN) founder Jeff Bezos shedding over $4 billion worth of the company’s shares as he reportedly prepares to move to Florida to take advantage of the better income tax environment. When it comes to insider buying, notably a beneficial owner stepped up and took a controlling stake in a struggling retailer. Also, public offerings of stock prompted some purchases at biotech companies.

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

Children’s Place

Buyer(s): 10% owner Mithaq Capital SPC
Total shares: almost 4.4 million
Price per share: $9.23 to $17.10
Total cost: around $55.9 million

Children’s Place Inc. (NASDAQ: PLCE) stock plunged recently in the wake of disappointing preliminary quarterly results and news that it is considering “strategic alternatives.” This Saudi Arabia-based buyer took advantage of the lower prices and increased its stake to more than 6.7 million shares, a controlling 54% stake. The stock has recovered from its retreat and was last seen trading near $26 per share, well above the purchase price range above. However, shares of this specialty retailer are still down about 69% compared to a year ago. On last look, the consensus price target of analysts was down at $13.67. (These 29 iconic brands completely collapsed and we forgot.)

RXO

RXO insider buying — Loading up the shares

Buyer(s): 10% owner MFN Partners
Total shares: more than 1.8 million
Price per share: $20.29 to $21.28
Total cost: nearly $37.9 million

This buyer also scooped up $15.1 million worth of shares earlier this month. RXO Inc. (NYSE: RXO) recently posted better-than-expected quarterly earnings, and last month it launched an AI-powered initiative. Shares of this Charlotte, North Carolina-based trucking company are down more than 8% year to date but were last seen trading just above the owner’s purchase price range. Analysts remain cautious, with a consensus Hold rating and a mean price target that is less than the current share price.

Mercury Systems

Buyer(s): CEO William Ballhouse and other insiders
Total shares: almost 1.4 million
Price per share: $26.67 to $29.30
Total cost: more than $37.8 million

One director bought most of these shares, more than 1.3 million of them. That same director acquired lots of shares back in November as well, and now the stake is up to more than 6.5 million shares. Massachusetts-based aerospace company Mercury Systems Inc. (NASDAQ: MRCY) posted disappointing quarterly results recently, and afterward it named a new chief accounting officer. The stock sank to a multiyear low after the report but is up more than 12% since then and was last seen trading above $30 a share. The $31.13 consensus price target suggests there is only a little more upside potential, and the consensus recommendation is to hold shares.

PepGen

Buyer(s): a director
Total shares: almost 2.6 million
Price per share: $10.64
Total cost: more than $27.2 million

This director took advantage of a secondary offering of PepGen Inc. (NASDAQ: PEPG) shares. The stock is up about 14% in the past month to around $14 a share, above the purchase price. However, it is still trading 14% or so lower compared to a year ago. The $21.20 consensus price target indicates analysts see over 51% upside in the next 12 months, and their consensus recommendation is to buy shares. Note that the buyer, whose stake is now almost 9.2 million shares, also purchased shares of Solid Biosciences Inc. (NASDAQ: SLDB) last month.

Metagenomi

Buyer(s): 10% owner Novo Holdings
Total shares: 900,000
Price per share: $10.25 to $15.00
Total cost: about $13.0 million

Gene editing biotechnology company Metagenomi Inc. (NASDAQ: MGX) just came public, and the investment arm of Novo Nordisk A/S (NYSE: NVO) claimed a piece of the pie. Metagenomi shares were last seen trading below the $15 IPO price but up 11% or so in the past week. Note that Novo Holdings also sold some shares of IO Biotech Inc. (NASDAQ: IOBT) at about the same time.

Sana Biotechnology

Buyer(s): 10% owner ARCH Venture Fund X
Total shares: more than 1.8 million
Price per share: $5.50
Total cost: nearly $10.0 million

A public offering of Sana Biotechnology Inc. (NASDAQ: SANA) stock prompted this insider buying. This Seattle-based company engages in the research and development of engineered cells as medicine. This buyer saw a quick profit, as the share price popped more than 31% in the past week and closed recently well above $8 a share. The stock is up almost 109% year to date. Analysts on average recommend buying shares.

Tenaya Therapeutics

Buyer(s): a director
Total shares: more than 2.2 million
Price per share: $4.50
Total cost: nearly $10.0 million

This director also took advantage of a public offering of stock to boost the stake in Tenaya Therapeutics Inc. (NASDAQ: TNYA) to nearly 13.6 million shares. The biopharmaceutical company is focused on cardiovascular diseases and is based in the San Francisco area. The stock is more than 78% higher year to date. Shares have traded as high as $8.09 in the past year, but the analysts’ mean price target is up at $19.14. So it is no surprise that the consensus recommendation is to buy shares.

And Other Insider Buying

In the past week, some insider buying was reported at Agree Realty, American Healthcare REIT, Blackstone, Hain Celestial, Lincoln National, Lumen Technologies, Rockwell Automation, VFC, and WisdomTree as well.

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