Three Stocks That Have Surged in 2023 After Insider Buying Activity

There are few trading signals that are more powerful than insider buying. No one has more insight into a company’s prospects than its leaders, and research shows that the trading activity of these insiders can be an excellent predictor of future stock performance.

Here, we are going to highlight three stocks that have surged in 2023 after recent insider buying activity. The strong performance of these stocks demonstrates the value of insider transaction data in investment research.

CrowdStrike

First up is CrowdStrike (CRWD:US). It’s a cybersecurity company that provides endpoint security, threat intelligence, and cyber-attack response services.

We highlighted insider buying at CrowdStrike in early January. At the time, board member Roxanne Austin had purchased 50,000 CRWD shares at an average price of $97.24 per share. This trading activity cost the insider around $4.89 million.

We thought this trade was worth highlighting due to the fact that Ms. Austin has a background in investment management. Currently, she is President and CEO of Austin Investment Advisors, a private investment and consulting firm. She also chairs the US Mid-market Investment Advisory Committee of EQT Partners.

Since Ms. Austin’s purchase, CrowdStrike stock has risen to $137, generating a gain of nearly 40% for the insider. That’s roughly four times the return of the S&P 500 index over the same period.

Now, some of the gains here can be attributed to improved sentiment towards the technology sector. However, strong quarterly results have also helped the stock. In March, CrowdStrike posted FY2023 Q4 revenue and earnings that were above forecasts and it also provided a better-than-expected revenue forecast for fiscal 2024.

Masimo Corp

Next, we have Masimo Corp (MASI:US). It’s a medical technology company that develops, manufactures, and markets a variety of noninvasive monitoring solutions.

We looked at insider buying here in late December. At the time, we highlighted some large stock purchases from CEO and Founder Joe Kiani. Our data showed that between November 11 and December 15 last year, the insider had bought around $6 million worth of stock at prices of between $123.99 and $144.79 per share.

We thought this insider activity was interesting due to the fact that Mr. Kiani – who started the company in 1989 – doesn’t purchase stock very often. His last purchase before these trades was all the way back in 2012.

Since these insider purchases, Masimo stock has risen to around $185, generating strong gains for the insider.

The stock has been boosted by better-than-expected Q4 results (earnings of $1.32 versus the consensus forecast of $1.18) as well as a partnership expansion with Philips.

Elmos Semiconductor

Finally, turning to Europe, we have Elmos Semiconductor (ELG:GR). It develops, manufactures, and markets semiconductors and sensors, primarily for the automotive industry.

Here, we noted in late November that Chairman of the Supervisory Board Klaus Weyer had purchased 37,829 bearer shares at an average price of €50.36 per share. This trade had cost the insider just under €2 million.

We thought this trade was interesting due to the fact that Mr. Weyer co-founded the company in 1984 and initially served as its Managing Director before serving as the Chairman of the Management Board. “There are unlikely to be many people who have a better understanding of Elmos Semiconductor than Mr. Weyer,” we wrote at the time.

Since this insider trading activity, the stock has risen to near €90 – a gain of around 80%. That compares to a gain of around 5% for the STOXX Europe 600.

Strength across the semiconductor sector has boosted this stock. However, strong full-year 2022 results (sales were up 39% year on year) and guidance for 2023 have helped the share price as well.

Insider transactions can help capture alpha

It’s worth pointing out that there are many other stocks that have recently outperformed after insider buying activity. So, insider transaction data continues to be a very valuable research tool.

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