With second quarter earnings season mostly in the rear-view mirror, investors will have to look in other directions to assess the attractiveness of public companies.
Key economic data points as well as commentary from the Federal Reserve about bond purchase tapering will be important developments to watch in the coming weeks. Company-specific press releases will also carry a lot of weight.
Another place to gain insight about an individual stock is to learn if corporate insiders are buying. As stock prices often make some of their biggest moves after earnings releases, the post-earnings reaction of an insider can tell the market what that individual or group thinks about the stock’s movement—and future growth potential.
Here are three significant transactions that have occurred at the hands of insiders since the calendar turned to September.
Are Insiders Buying Sensient Technologies?
Sensient Technologies (NYSE: SXT) is one the world’s top makers of colors, flavors, and specialty ingredients for the food & beverage, pharmaceutical, cosmetic, and personal care industries. The company’s second quarter revenues rose 3.9% led by a rebound in the Asia Pacific segment which grew revenues 15.9%. Management also offered an upbeat outlook for the remainder of 2021 which sparked a jump in the stock price.
Shares of Sensient Technologies have trended upward since the late-July report but that hasn’t stopped one prominent insider from buying into the momentum. On September 1st, Singapore-based Winder Investment Pte Ltd bought 60,000 shares at an average price of $87.84. The $5.3 million purchase was significant in and of itself but was particularly eye-opening because it marked the fourth straight day that the group bought Sensient shares.
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In total, Winder Investment spent more than $13.3 million to up its stake in the company to 4,374,617 shares. This represents more than 10% of the shares outstanding and means the major stakeholder is an insider that investors should pay attention to. Given the ongoing recovery in the global economy and the restaurant industry in particular, Sensient’s key institutional insider appears to be sensing that the stock can run into the $90’s and beyond.
Why is E2open Stock Going Up?
As the story often goes with technology IPOs, E2open (NYSE:ETWO) has been volatile since making its public market debut in February. It climbed as high as $14.58 in May only to slide back below its $11.00 initial offering price.
The supply chain management software provider has trended higher the last two weeks aided by an August 31st ‘special meeting’ for shareholders. The meeting was setup to discuss E2open’s acquisition of cloud-based logistics platform BluJay Solutions which was finalized a day later.
What also has investors buzzing is management’s revenue guidance hike for fiscal 2022. It now expects $374 million in revenue at the midpoint which represents 11% year-over-year organic growth. The addition of BluJay solutions will add a significant layer of inorganic growth with the newly acquired company forecast to bring in approximately $200 million in additional revenue.
Adding fuel to E2open’s recent ascent is Neuberger Berman Group’s $26 million buy of September 1st. On this day, the NYC-based investment firm added over 2.4 million shares to its position in the Neuberger Berman Opportunistic Capital Solutions Master Fund. The purchase accounted for nearly two-thirds of the stock’s trading volume on September 1st.
The same day, board member Chu Chinh bought $300,001 worth of E2open stock showing that individual insiders also believe in the company’s growth prospects. With a major acquisition under its wing and the support of insiders, E2open appears to have the wind at its back heading into the final months of the year.
Is Ziopharm Oncology Stock Oversold?
Ziopharm Oncology (NASDAQ:ZIOP) is a small cap penny stock that has declined in each of the last six months. There are several corporate insiders who seem to believe that a turnaround is imminent.
On September 2nd, four different Ziopharm Oncology board members bought stock in the struggling biotech. The purchases were made at prices ranging from $1.71 to $1.83 and totaled $434,085 in value.
This is an example of a situation where multiple insiders have signaled that a stock is attractive. While the value of the combined purchases isn’t earth-shattering, the fact that half of the board’s eight members are suddenly buyers makes this noteworthy insider trading activity. The buys are also intriguing because there hadn’t been any insider activity since mid-May.
The likely catalyst for the director purchases was the August 30th appointment of Kevin Boyle as Ziopharm’s new CEO. Mr. Boyle was previously the head of Kuur Therapeutics which was bought out by Athenex.
The board appears to be energized by the hire and his potential to take the cancer therapy company to new heights possibly culminating in a takeover by a larger biotech firm. Ziopharm Oncology, which has yet to bring any therapies to market or record business-related revenue, has a long road ahead but insiders are betting that better times are ahead.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| ZIOPHARM Oncology (ZIOP) | $0.00 | -100.0% | N/A | -2.01 | | N/A |
| E2open Parent (ETWO) | $3.02 | +2.9% | N/A | -1.17 | Hold | $3.90 |
| Sensient Technologies (SXT) | $75.67 | +0.3% | 2.17% | 36.21 | Buy | $85.00 |
