When tracking insider trading, there are a handful of bullish signals that can be identified within any given series of trades. Two of the most significant factors to observe with insider trading are holding increases and cluster buying:
- Holding increases refer to an investor who has raised their stake in a company by a notable percentage.
- Cluster buying is where three or more insiders purchase company stock within a short period of time.
These are worthwhile events to analyze, as they are often bullish indicators of internal sentiment towards a company’s stock. Four businesses below have recently experienced significant insider buying clusters and holding increases:
1. Chewy Inc (CHWY:US)
Chewy Inc is a major player in the American pet food industry, currently valued on the New York Stock Exchange at around $12.07 billion.
2iQ reported on a wave of insider buying at Chewy Inc in June 2022. Board member James Star purchased 180,636 CHWY shares at $27.71 per share. This massive trade cost Star just over $5,000,000 in total, increasing his holding to 257,082 CHWY shares.
The size of their holding skyrocketed by 236%. Star has an extensive investment background, currently serving as Executive Chairman and Investment Committee Chair of Longview Asset Management LLC, a multi-strategy investment firm. He has also served as a director for several pension funds and registered mutual funds.
In addition to this substantial trade, strong Q1 results were posted by Chewy Inc to reinforce this as a bullish sign.
2. Neo Performance Materials Inc (NEO:CN)
Over in Canada, 2iQ’s analysts recently observed a cluster of insider buying at Neo Performance Materials. The industrial manufacturing company is listed on the Toronto Stock Exchange with a market capitalization of CAD 496 million.
- President and CEO, Constantine Karayannopoulos (7,600 NEO shares at CAD 13.00 per share)
- CFO, Rahim Suleman (10,000 NEO shares at CAD 12.25 per share)
- Chairperson, Claire Kennedy (3,500 NEO shares at CAD 13.10 per share)
These three insiders spent over CAD 265,000 on NEO shares and this is the first major insider buying at Neo since 2020, where the CEO and Kennedy purchased stock just before it increased in value.
Both the CEO and CFO are aware of the company’s strategic development, with access to extensive business knowledge. This means any trades made by these insiders are likely to be informed by Neo’s prospects, as evidenced by strong Q1 results, and therefore bullish signals.
3. Humm Group Ltd (HUM:AU)
Humm Group Ltd is an Australian financial services provider formerly known as FlexiGroup Ltd. In June 2022, 2iQ reported on the company’s founder.
Company founder and former chairman, Andrew J. Abercrombie, purchased almost 2 million HUM shares at up to AUD 0.806 per share. Abercrombie is currently a Director on Humm’s board, having purchased a substantial 6.1 million HUM shares in 2022 Q2 alone.
The above trade reported by 2iQ boosted their holding by 20.5%, a number that continues to grow as the weeks go on.
Abercrombie’s regular investments aren’t only a sign of confidence in HUM, but also part of an ongoing disagreement between the founder and the company board regarding an acquisition of Humm Group by Latitude Group (LFS:AU).
Regardless of this ongoing internal dispute, the outlook for HUM based on the interest by Latitude is a bullish sign for the stock. Find out more about the details of this acquisition here.
4. Carvana Co (CVNA:US)
Shifting focus back to the US, there was a huge cluster worth nearly $3.5 million at e-commerce platform Carvana Co. The firm enables consumers with an in-depth market for used cars, and is currently listed on the New York Stock Exchange with a $4.3 billion market cap.
Amongst this cluster from mid-May 2022 were top-level insiders:
- Founder and Chief Brand Officer, Ryan Keeton (40,000 CVNA shares at $24.75 per share)
- General Counsel, Paul Breaux (59,000 CVNA shares at $29.34 per share)
- Board member, Dan Quayle (18,750 CVNA shares at $39.14 per share)
This $3.5 million cluster is notable for multiple reasons, not limited just to its sheer monetary value. The CBO Ryan Keeton is also the co-founder of Carvana, and likely has one of the most complete understandings of the company’s prospects.
The General Counsel notably purchased a large number of CVNA shares, which in the process massively boosted their holding in the company. Finally, board member Dan Quayle is an experienced investor, having served at investment firms since 1999.
The combined experience of these insiders, in addition to the close proximity of their trades as part of this cluster, indicates a bullish bounce back for this stock.
Read more daily insider buying reports on the 2iQ blog.