One of the most bullish signals in insider transaction analysis is ‘cluster buying.’ This is where three or more insiders at the same organization have purchased company stock within a short period of time.
In this report, we are going to highlight a cluster buying pattern at Zimmer Biomet Holdings Inc (ZBH:US). Zimmer Biomet designs, manufactures, and markets a broad range of healthcare products including orthopedic reconstructive products, trauma products, and spine, craniomaxillofacial and thoracic products. The company is listed on the New York Stock Exchange and currently has a market capitalization of $25.0 billion.
Our data shows that between August 23 and 30, five insiders at Zimmer Biomet bought stock. Those who bought shares were:
Board member Arthur Higgins (1,000 shares @ $115.61 per share)
Board member Betsy Bernard (871 shares @ $114.84 per share)
Board member Michael Michelson (1,300 shares @ $115.50 per share)
Board member Robert A. Hagemann (2,000 shares @ $116.48 per share)
Board member Sreelakshmi Kolli (1,000 shares @ $120.37 per share)
Combined, the five insiders invested around $719,000 in the company.
This insider activity is worth highlighting for several reasons.
Firstly, all five insiders have made large, $100k+ purchases that have significantly increased the size of their holdings in the company. Our Insider Model views this buying activity as quite bullish.
Secondly, two of the insiders, Mr. Higgins and Mr. Michelson, have investment backgrounds. Mr. Higgins is currently an Operating Advisor to the Abu Dhabi Investment Authority while Mr. Michelson is a Senior Advisory Partner to KKR Management. In addition, Mr. Hagemann is SVP and CFO at Quest Diagnostics while Director Kolli is the Executive Vice President and Chief Digital Officer of Align Technology.
Share price weakness
Zimmer Biomet shares have pulled back recently. Soft guidance for 2024 and a leadership transition (the company recently appointed a new CEO after Bryan Hanson left to join 3M) have been the main drivers of the share price weakness.
This is a good buying opportunity according to analysts at BTIG, who recently upgraded the stock to "buy" from "neutral". Noting that Zimmer currently sports a forward-looking price-to-earnings (P/E) ratio of around 15, compared to 25 for rival Stryker, they said that after the pullback the stock is “too attractive to pass up" given its encouraging business fundamentals.
Clearly, the five insiders here also see a good buying opportunity after the recent pullback.