Insider Buying

2iQ Insider Brief: Provention Bio (PRVB: US) CrowdStrike Holdings Inc (CRWD: US) BT Group (BT/A: LN)

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Provention Bio (PRVB: US)

12-month performance: +618%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors including Co-Founder and CEO
Recent news: Drug granted ‘breakthrough status’ by FDA

Provention Bio is a clinical-stage biopharmaceutical company that develops therapeutics targeting immune-mediated diseases. The company’s portfolio includes therapeutics for a broad range of diseases and conditions including type one diabetes, Crohn’s disease, celiac disease, and ulcerative colitis. The stock is listed on the NASDAQ Capital Market and currently has a market capitalisation of $716 million.

We last covered Provention Bio in late June after the stock surged on the back of promising study results. At the time, we noted that both Co-Founder and CEO Ashleigh Palmer and director Anthony DiGiandomenico had recently purchased shares, which we saw as a bullish signal. Fast forward to today, and the stock has climbed nearly 20% since we last covered it, despite the fact that the company raised approximately $90 million through an equity offering in September. In August, the FDA granted the group’s drug teplizumab ‘breakthrough therapy’ status for the prevention or delay of clinical type one diabetes.

first pic                    Source: 2iQ Research

What’s interesting here is that since we last covered the stock in June, insiders have continued to buy. In December, we observed purchases from Palmer, as well as from Co-Founder and Chief Scientific Officer Francisco Leon and COO Eleanor Ramos, while in August and September, we observed purchases from Palmer, DiGiandomenico, and Leon. Clearly, insiders at Provention Bio are confident about the future. Given this persistent insider buying, we think the stock has the potential to keep rising.

CrowdStrike Holdings Inc (CRWD: US)

12-month performance: N/A
Insider activity: Bearish
Selling pattern: Large sales from two private equity firms
Recent news: Released Q3 results

CrowdStrike Holdings is a cybersecurity company that provides endpoint security, threat intelligence, and cyberattack response services. The company’s platform, Falcon, is a multi-tenant, cloud native, intelligent security solution capable of protecting workloads across on-premise, virtualised, and cloud-based environments. The stock is listed on the NASDAQ Global Select Market and currently has a market capitalisation of $10.5 billion.

CrowdStrike shares initially surged following the company’s Initial Public Offering (IPO) in June 2019, climbing above $100 in August – around three times the IPO price. However, since then, the stock has pulled back significantly, to just over $50, as reality has kicked in. While December’s third-quarter results showed a strong rise in revenue for the first nine months of the year, the company’s net loss widened to $113.3 million, from $108.8 million last year.

second pic                   Source: 2iQ Research

What looks concerning here is that in December two major private equity investors sold a significant quantity of CRWD stock. Throughout the month, we observed multiple sales from CrowdStrike’s largest shareholder, Warburg Pincus (a number of senior executives at Warburg are on the board at CrowdStrike), as well as from major shareholder CapitalG – Alphabet’s growth equity investment fund. Together, these major shareholders sold nearly $450 million worth of stock. A number of top-level directors, including the CEO and CFO, also sold a significant quantity of stock through automated transactions throughout the month. Given this substantial level of selling, we think owning the stock is quite risky at present.

BT Group (BT/A: LN)

12-month performance: -18%
Insider activity: Bullish
Buying pattern: Large purchases from CFO
Recent news: Underwhelming half-year results

BT Group is a UK-based telecommunications company. The company is the largest provider of fixed-line voice and broadband services in the UK as well as the largest mobile network operator. The stock is listed on the London Stock Exchange and currently has a market capitalisation of £19.5 billion.

BT shares have underperformed over the last year, falling from near 240p to 194p. Investors have dumped the stock on the back of rising debt levels, lack of revenue growth, rising costs, concerns over the sustainability of the company’s dividend, and economic and political uncertainty in the UK. Price target cuts from brokers have also impacted sentiment towards the stock.

third pic                   Source: 2iQ Research

Looking at insider transaction activity, we think BT could be worth a closer look right now. We say this because just before Christmas, BT’s CFO Simon Lowth purchased 425,057 shares in the company, spending a total of £867,116 on stock. This suggests that the insider is confident that the shares will rebound. It’s also worth noting that new CEO Philip Jansen spent nearly £1 million on stock in September – another bullish signal. These large purchases from BT insiders suggest that the outlook for BT shares may not be as bad as some investors fear.