It can be very profitable to analyze cluster buying when tracking insider trading – clusters are defined as three or more insider trades made in a short period of time. Investors should pay attention when a group of top-level insiders make large purchases within their own company as these shareholders are amongst the most proactive and informed within the market.
Below are four businesses that experienced significant insider buying clusters in December 2021 and January 2022.
1. Yellow Corp (YELL:US)
Yellow Corp is a United States-based logistics firm traded on the NASDAQ Stock Exchange. Holland, New Penn, Reddaway, and YRC Freight are among the company's brands.
- Director Matthew Doheny (56,000 shares at $12.23 per share)
- Director David McClimon (20,000 shares at $13.12 per share)
- Director Douglas Carty (10,000 shares at $13.51 per share)
This cluster buying amounted to around $1.1 million spent on YELL stock.
Insider transactions are uncommon at Yellow Corp. As a result, the fact that several insiders bought stock at the same time shows that the company's stock sentiment has shifted. It's worth noting that the firm has a score of 5 on 2iQ's Insider Model, implying that insider sentiment is very strong at Yellow.
Secondly, these insider purchases totaled over $1 million, indicating that the top management is quite optimistic that the stock will continue to rise. Matthew Doheny is particularly interesting, having increased his stake in the company by 33% with this trade. This implies he feels YELL is undervalued.
2. Blucora Inc (BCOR:US)
Blucora is a tax-focused wealth management company that offers both services and software solutions. In December 2021, Blucora experienced significant insider activity that 2iQ reported on.
The following insiders made trades in December 2021:
- President & CEO Chris Walters (10,000 shares at $16.73 per share)
- CFO Marc Mehlman (10,000 shares at $16.50 per share)
- Chair Georganne Proctor (3,025 shares at $16.35 per share)
- Board member Mark Ernst (50,000 shares at $16.51 per share)
In total, these insiders spent around $1.2 million on BCOR shares.
In our opinion, this cluster purchasing is quite positive. The cluster buying pattern includes purchases from three top-level insiders: the President & CEO, the CFO, and the Chair. Each of these insiders is likely to have a deeper understanding of the company's operations and prospects.
Mark Ernst, whilst not as senior as the others, is an investment specialist with a background in financial services and taxes. He is currently the Managing Partner of Bellevue Capital LLC, a private investment business, where he has held this position since May 2018. He formerly worked at H&R Block, Inc. in various senior positions, including Chairman, President, and CEO from 2001 to 2007, and COO from 1998 to 2000.
3. Rentokil Initial PLC (RTO:LN)
Over in the UK, Rentokil Initial provides pest control and business hygiene services operating in approximately 90 countries across the world. It has a market capitalization of £10.8 billion and is traded on the London Stock Exchange.
In January 2022, 2iQ reported on a massive cluster of insider buying at Rentokil. 10 Rentokil Initial insiders acquired stock between December 14 and December 21, including the CEO, CFO, and Chairman of the Board. Insiders bought 261,598 shares in total, for a total cost of £1.85 million.
Amongst this cluster were CEO Andy Ransom, CFO Stuart Ingall-Tombs, and Chairman Richard Solomons. These senior-level insiders are likely to be more knowledgeable about the company's prospects than external investors. According to 2iQ’s data, this was the largest buying activity within a quarter at Rentokil Initial in several years.
4. Winpak Ltd (WPK:CN)
Winpak is an international packaging company that produces and distributes high-quality packaging materials as well as cutting-edge packaging equipment. Perishable foods, drinks, medicines, and personal care products are all protected by its packaging solutions.
During that time, the following companies made the most purchases:
- Chairman Antti Aarnio-Wihuri (50,000 shares at CAD $36.77 per share)
- CFO Larry Warelis (7,000 shares at CAD $35.69 per share)
- Independent Director Bruce Berry (15,000 shares at CAD $34.99 per share)
Insiders spent around CAD $1.7 million on shares in total.
For a couple of reasons, this cluster buying behavior is worth analyzing. To begin with, the cluster includes purchases by numerous top-level insiders, including the Chairman and CFO. Insiders are likely to have extensive knowledge of the company's activities.
Second, insiders have invested a significant amount of money in the company's shares. This indicates that they are quite confident in the stock's upward trajectory. It's worth noting that these acquisitions reflect the most insider purchasing at Winpak in a quarter in over a decade, according to our data.
For more reports on cluster buying, check out the following:
Read more cluster buying reports on the 2iQ blog.