There are significant insider trades and then there are ‘big splash’ insider trades. Those that fall into the latter category often make big waves in trading circles and have the potential to drive a stock’s long-term direction.
While all transactions placed by corporate insiders carry value for retail investors, the big splash variety merits extra attention. They can come in the form of a large, one-time buy or sell, or a series of orders made by executives or board members. Trades placed by prominent insiders can carry even more weight in the investment community.
There have been some intriguing insider activity lately especially among Nasdaq stocks. For the three stocks discussed here, investors may want to swim with the tide rather than go against the powerful insider currents.
Is Insider Buying Driving the Krispy Kreme Rally?
Krispy Kreme’s (NASDAQ: DNUT) return to the public markets is still as fresh as one of its glazed donuts, but the stock has already been subject to some big insider moves.
Just a week into the company’s IPO, JAB Indulgence B.V. purchased $94.2 million worth of Krispy Kreme shares. Interestingly, the German investment group indulged in the company it took private in 2016, the same year it took Keurig Green Mountain private.
At the time, including both direct and interest interests in the donut maker, JAB Holdings owned more than 68 million Krispy Kreme shares or approximately 42% of the company. That told investors that this was one controlling shareholder to keep an eye on.
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In recent days, JAB Holdings was back at it. Between August 19th to August 20th, it bought another $7.9 million worth of Krispy Kreme after it had sunk to new lows. It should come as no surprise then that since the influential insider added to its position, Krispy Kreme has gone on a four-day run returning to its initial offering level and then some. The icing on the donut here is that two other insiders bought shares after JAB did including President & CEO Michael Tattersfield.
Is Amazon Invested in Nautilus Biotechnology?
In the case of Nautilus Biotechnology (NASDAQ:NAUT), the big insider splash occurred in late-May and early June. That’s when key institutional investor Perceptive Advisors bought $55.1 million worth of the biotech stock when it was trading around $10. It sparked a brief rally, but Nautilus has since trended lower.
The next major trading event took place on August 5th. That’s when the market learned that none other than Amazon held a $15 million position in Nautilus Biotechnology as of the end of the second quarter. Although Amazon declined to comment on its relationship with the biotech, the two other public company investments disclosed were in companies it is known to do business with.
More importantly, for a giant like Amazon to have an interest in a relatively unknown small-cap biotech is a big deal. Nautilus is developing a device that can measure the human proteome. Not to be confused with the human genome, the proteome are a set of proteins that are always changing in the body based on food consumption and other activities.
The Nautilus instruments and related software are said to be a potential breakthrough system with applications in clinical diagnostics, drug discovery, and precision medicine. On top of the Amazon effect, recent insider buys by a pair of executives make this volatile biotech play one to keep on the radar.
Is Casella Waste Stock Overbought?
Like many industrials, Casella Waste (NASDAQ: CWST) has enjoyed a steady uptrend since its pandemic low. In fact, the mid-cap waste management company is riding a 5-year winning streak. Given its 18% year-to-date advance, it looks poised to stretch it to six years.
Amidst the remarkable run, several corporate insiders have decided that its time to take some profits off the table. Over the last three weeks, five different executives have trimmed their Casella Waste holdings. The wave of selling activity marked the first incidence of insider selling since March 2021.
The number of sellers, as well as the size of some of the transactions, should make Casella Waste shareholders weary. A total of $16.9 million worth of the stock was sold by the group from August 4th to August 20th. The most notable trades are a $7.7 million sell by CEO John Casella and a $6.8 million sell-by board chairman Douglas Casella. Late last week, Chief Operating Officer (COO) Edwin Johnson dumped 20,000 shares with the stock trading near all-time highs.
Casella Waste shares do look stretched from a technical analysis perspective. The price has traveled about $7 from the 50-day moving average line marking the biggest such gap in a while. A correction also appears likely based on the Bollinger band and MACD indicators.
Above all, the sudden wave of insider selling is reason to tread cautiously at present levels. It could also signal an opportunity for short sellers to take advantage of an impending downtrend. Either way, the information-packed in the recent Casella Waste insider selling spree shouldn’t go to waste.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| Casella Waste Systems (CWST) | $111.38 | -1.4% | N/A | 928.17 | Buy | $111.50 |
| Nautilus Biotechnology (NAUT) | $2.26 | -7.4% | N/A | -4.04 | Moderate Buy | $4.50 |
| Krispy Kreme (DNUT) | $10.92 | -1.9% | 1.28% | 64.24 | Moderate Buy | $15.56 |
