Corporate insiders are some of the most informed participants in the market. If they’re buying company stock, it’s often worth taking a closer look.
In this report, we are going to highlight a large insider purchase at the Howard Hughes Corporation (HHC:US). Howard Hughes is an American real estate company that owns, manages, and develops commercial, residential and mixed-use property. The company is listed on the New York Stock Exchange and currently has a market capitalization of $5.5 billion.
Howard Hughes Corp: Insider Buying
Our records show that on 5 April, board member Allen Model purchased 4,300 HHC shares at a price of $97.17 per share. This purchase – which cost the insider just under $420,000 – increased his holding by 26%.
This is a stock we have had success with in the past. In January, for example, we noted that Pershing Square Capital Management, the hedge fund run by Bill Ackman (who is Chairman of Howard Hughes) had spent $154 million on stock. We saw this large purchase as a bullish signal. Since then, HHC stock has risen from $79 to $100, delivering a gain of 27%. By contrast, the S&P 500 index has risen just 9% since then.
We see this latest insider trade as another high-conviction trade. Mr. Model – who is Co-Founder of Overseas Strategic Consulting, an international consulting firm that provides public information services to agencies such as The World Bank and the United States Agency for International Development – has spent a substantial amount of money on stock and increased the size of his holding significantly. This suggests that he is confident the stock is set to continue climbing.
Optimistic for 2021
In Howard Hughes’ recent full-year results press release, the company was optimistic about the future. Management advised that the group has largely completed its transformation plan and said that it is now focused squarely on the acceleration of development opportunities within its master planned communities (MPCs) in response to growing market demand. It also advised that the group’s balance sheet is strong, and that the company is now “ideally positioned for growth” across the portfolio.
"This past year highlights the exceptional quality and the resiliency of HHC's irreplaceable assets and our business model,” said CEO David O’Reilly. “Our new leadership is committed to seeking out the most advantageous opportunities within our MPCs that increase our net asset value and achieve the highest risk-adjusted returns" he added.
Given this confident tone, we see the insider purchase here as a bullish signal.