Historically, the volume of insider selling tends to exceed that of insider buying. This is partly because when corporate executives and board members exercise granted stock options it is considered a sale activity. Then there are situations when insiders sell stock to diversify their personal portfolios, a common tactic that is often done through prescribed trading plans.
Lately, record-high levels in the major indices have given executives even more reason to take profits off the table. There has, however, been a healthy stream of insider buying as well. Large institutional firms, which are considered insiders when they own at least 10% of a company, often make the biggest splashes. Individuals can also move the needle on a stock by making a large purchase.
Still, in an era of predominantly insider selling, insider buying activity can really stand out and impact a stock’s future performance. Here are three of last week’s most intriguing insider buys.
Is Viridian Therapeutics a Good Microcap Stock?
Like many small biotech companies, Viridian Therapeutics (NASDAQ: VRDN) has had a rough go of it since hitting the public markets in 2014. With the company struggling to meet Nasdaq listing requirements it has opted for a pair of 1-for-15 reverse stock splits with the second taking effect about a year ago.
Yet while many investors have lost hope that the Viridian’s treatments would ever amount to financial gain, it has had the support of some large institutions. One of them is Fairmount Funds Management, a Philadelphia-based investment firm. On Tuesday, Fairmount took a $9,999,000 stake in the biotech for its second healthcare fund as part of a secondary offering.
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The timing of the buy was telling because it occurred when Viridian share price had been cut in half from its January 2021 peak. It also helped spark a major rally in the micro-cap stock. Investors took note of Fairmount’s show of support at $11 per share and Viridian closed the week on a four-day rally to $16.
Fairmount’s statement buy of Viridian marked the first insider activity in the stock since November 2020. The investment manager sure thinks Viridian’s therapies for serious, underserved diseases such as thyroid eye disease (TED) will find success. Add in the fact that several sell-side firms have called the stock a ‘buy’ this year and Viridian may finally be finding its stride.
Are Evergy Insiders Buying the Stock?
In the category of intriguing buying by individual insiders, Evergy (NYSE: EVRG) saw some good activity last week. A pair of key executives bought shares in the utility company on September 23rd after things had been quiet on the insider front since June.
President & CEO David Campbell added nearly $500,000 to his Evergy position by purchasing 7,850 shares at an average price of $63.66. Mr. Campbell now owns nearly 72,000 shares of the company he runs, so investors should feel good about a leader that has a lot of skin in the game.
The same day, Chief Financial Officer (CFO) Kirkland Andrews executed a similar sized buy at approximately the same average price. Although Mr. Andrews owns far fewer shares, in a way, his purchase was more telling because it increased his Evergy stake by 55%.
The nearly identical-sized purchases on the same day should pique the interest of retail investors. Did the duo discuss the matter over lunch and agree the stock was undervalued? Regardless of how the insider buys came about, the one-two punch valued at $1 million is compelling. With a focus on delivering clean energy to its customers along the Kansas-Missouri border, Evergy’s leadership is hoping there are powerful shareholder returns ahead.
Did Insiders Participate in the aTyr Pharma Secondary?
aTyr Pharma (NASDAQ: LIFE) has been one of the most exciting Nasdaq stocks in September. With four days still left in the month, trading volume has already surpassed the previous post-split high by a seven-to-one margin.
The fireworks began on September 13th when aTyr announced positive data from an early-stage trial of its drug candidate for the treatment of pulmonary sarcoidosis, a rare disease caused by inflammation that can occur in almost any human organ. The results of the study sparked a huge rally in a stock that had flatlined for most of the year.
Soon thereafter, aTyr announced a secondary offering, a move that often follows a favorable clinical result. The San Diego-based biotech striked while the iron was hot and the offering turned out to be a big success. More than $86 million was raised in the offering of more than 10 million shares at $8.00 per share giving the firm much-needed capital to advance its pipeline. The company had expected proceeds of around $75 million.
So, where does the insider trading come in? Well, insiders were among those that bought the newly issued shares. Board member Paul Schimmel chipped in with a 250,000-share purchase. The $2 million buy was a significant addition to the insider’s holdings which include indirect interests in family trust accounts.
Shares of aTyr climbed as high as $13.10 on Thursday before profit taking set in on Friday. However, with momentum in the business following an encouraging clinical development and successful capital raise, the stock is really coming to ‘LIFE’. Every sell-side analyst that covers aTyr has a ‘buy’ rating and target prices range from $18 to $21 range, so the rally may have only just begun.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| Viridian Therapeutics (VRDN) | $21.03 | +4.1% | N/A | -4.88 | Moderate Buy | $36.33 |
| aTyr Pharma (LIFE) | $0.00 | -100.0% | N/A | -2.11 | Buy | $25.50 |
| Evergy (EVRG) | $64.49 | +0.4% | 4.14% | 17.43 | Moderate Buy | $61.88 |
