Bear markets are noisy and volatile. It’s difficult for investors to cut through the noise, find the right signals and discover good opportunities.
One of the clearest signals is insider trading activity. When the senior directors, founders, and large shareholders of a corporation buy or sell shares, it could be a signal of underlying strength or weakness.
Some studies have found that net insider activity in any month is positively correlated with stock price action over the subsequent two months.
Put simply, insiders buying more shares of their own company is a green flag. Here’s a look at the companies with the heaviest insider buying activity in recent months.
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Occidental Petroleum
Energy stocks have outperformed nearly every other asset on the market this year. However, the sector has lost momentum in recent weeks. Crude oil lost over 20% of its value, dipping energy stocks into an official bear market.
Insiders at Occidental Petroleum (OXY) see this dip as an opportunity. Of the 22 total insider trades over the past three months, 16 were insider purchases. On net, insiders purchased more than 17 million shares of the company during this quarter.
Senior directors Christopher Champion and Vicky Bailey were net buyers during this quarter. But the biggest transactions came from key shareholder Berkshire Hathaway (BRK). Warren Buffett has been aggressively accumulating this position since the start of the year.
The fact that insiders and the world’s most successful investor are buying this stock at the same time is a clear indication of underlying value.
Fiserv
Insiders have been aggressively buying shares of financial technology company Fiserv (FISV). The stock has been beaten down along with the rest of the FinTech sector. However, it has outperformed its peers. It’s down just 17% year to date, compared to the Nasdaq’s 30% plunge over the same period.
Now, insiders see more room for growth ahead. Over the past three months, insiders completed 14 purchase transactions for a net of 1.63 million shares. Senior directors Guy Chiarello and Doyle Simons were net buyers, but the biggest transactions were executed by investment company Valueact Holdings, L.P.
Gitlab
Software platform Gitlab (GTLB) has lost 60% of its value since November last year. It’s been caught in the ongoing tech bear market. However, the company’s software package could see robust demand as corporations try to automate processes and improve efficiency during a downturn.
This is why the management team expects topline growth of 58% this year. Meanwhile, gross margins are as high as 90%. Put simply, the company is in a strong position to sustain its growth strategy despite the economic headwinds ahead.
GitLab’s management team is certainly confident about its prospects. They’ve been aggressively buying shares of the company. Insiders purchased 18 million shares across 15 transactions in the past three months. C-suite executives like Michael Mcbride, Robin Schulman, and Dale Brown were buying during this quarter.
Seed investor Khosla Ventures Seed C, L.P also raised its stake in the company. The venture capitalist team now owns more than 10% of GitLab’s outstanding shares.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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