Insider Buying

Five Top Insider Buying Signals in 2022

2022 was a challenging year for equity investors. With major indexes such as the S&P 500, the Nasdaq, and the STOXX Europe 600 producing double-digit negative returns, there were few places to hide. 

Corporate insiders – who are some of the most informed participants in the market – continued to generate gains from their trading activity, however. With that in mind, here’s a look at five top insider buying signals from 2022. 

First Solar 

Let’s start with First Solar (FSLR:US), which is listed on the Nasdaq. It’s a leading manufacturer of solar panels. 

Here, we noted in early August that CFO Alex Bradley had just purchased around $200,000 worth of stock. We thought this trade was interesting due to the fact that Mr. Bradley has a background in energy sector investing. 

Mr. Bradley paid $100.56 per share for the stock he purchased in August. However, the stock ended the year at $149.79 – roughly 49% higher. That’s a strong return, particularly when you consider that the S&P 500 index declined roughly 6% over the same period. 

One driver of the share price strength here was Joe Biden’s Inflation Reduction Act, which is focused on reducing climate change. Plans to expand production, strong revenue growth, and increased broker price targets also pushed the stock higher. 

Adtalem Global Education 

Next up is Adtalem Global Education (ATGE:US), which is listed on the New York Stock Exchange. It operates universities in the medical and healthcare fields. 

Here, we noted in February that six insiders (including an experienced investor) had recently purchased stock. Combined, these insiders had invested nearly $1.5 million. We viewed this ‘cluster buying’ pattern as bullish. 

The insiders bought shares near the $24 mark. Adtalem stock ended the year at $35.50, however, meaning that the insiders generated near-50% returns from their stock purchases. Over the same time horizon, the S&P 500 index fell around 14%. 

The rise in the share price came on the back of the sale of the company's financial services arm, an accelerated share repurchase program, and strong revenue growth. For fiscal 2022, revenue was up 53% year on year. 

Uni-Select 

Turning to the Toronto Stock Exchange, we had success with Uni-Select (UNS:CN). It’s engaged in the distribution of automotive products.

Here, we noted in June that three top-level insiders – including the CEO and the CFO – had recently purchased stock at prices of around CAD $28-$29. This got our attention as research shows that top-level insiders tend to be better predictors of future stock performance than lower-ranking insiders. 

Uni-Select stock ended 2022 at $42.84, meaning that the insiders here generated gains of around 50%. Over the same period, the S&P/TSX Composite index went backwards. 

It seems the share price rise here was mainly due to strong earnings growth (adjusted earnings for the first three quarters of 2022 more than doubled to USD $1.42 per share). This earnings growth boosted investors’ confidence in the stock. 

Bank of Georgia 

On the London Stock Exchange, we had success with Bank of Georgia (BGEO:LN). It’s a financial services company that carries out retail banking activities, investment banking, and wealth management operations in Georgia. 

Here, we highlighted stock purchases from the CFO and the Chairman in March. We also highlighted a large purchase from investment management company Gemsstock Ltd, which is represented on the company’s board. 

These trades – which were made when the stock was trading between £10-£12 – were timed very well in hindsight as the stock finished the year at £26.05. This means the insiders more than doubled their money. That’s an excellent result given that the FTSE All-Share index was basically flat over the same period. 

Strong quarterly results were one of the main drivers of Bank of Georgia’s share price rise. For the first three quarters of 2022, profit was up 53.2% year on year. 

JOST Werke

Finally, in the European markets, there was a top insider trade at German company JOST Werke (JST:AG). It’s a global manufacturer and supplier of safety-related components and systems for commercial vehicles. 

Here, we noted in April that CEO Joachim Duerr had just purchased around €100,000 worth of shares at a price of €34.45 per share. This purchase had increased the size of his holding by over 40%, which indicated that he was very confident the stock was set to move higher. 

In hindsight, Mr. Duerr’s trade was timed very well as the stock ended the year at a price of €52.60 – 53% higher than his purchase price. Over the same period, the STOXX Europe 600 declined by around 7%. So, the insider generated some serious outperformance. 

The share price gains here were predominantly driven by strong quarterly results. For the first three quarters of 2022, sales were up 22.8% year on year. And in November, the company raised its guidance for the full year 2022. 

Insider Transaction Data Can Help Investors Capture Alpha 

It’s worth pointing out that this is only a small selection of our profitable insider trading signals from 2022. There were many more buying signals that beat the market. 

Overall, insider transaction data was a valuable research tool last year. Combined with other forms of data, it could have helped investors capture alpha and improve their performance. 

Want to delve deeper? 

Get in touch today to learn about 2iQ’s insider transaction solutions, including our proprietary Insider Model.  

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