Top insider trades (Mon, Feb 9)

Connor’s Commentary

There were 174 new insider trades filed.

Three insider trades were flagged as High Signal. CEO Watcher Premium subs can see those in the Trade Notes section of this email or the CEO Watcher Premium Dashboard that is linked in the Data Dump section.

As a reminder, if you upgrade to CEO Watcher Premium (link) and find that it isn’t for you, I’ll give you a refund.

• Odd behavior by the Chief Human Resources Officer at Greif (GEF), who sold $1M of the stock and then bought $160k the next day

• Director at Amphenol Corp (APH) bought $1.29M of the stock after the earnings dip

• General Counsel joins the EVP of GBUL Borrow in buying the dip at SoFi Technologies (SOFI)

• A director at Roper Technologies (ROP) bought $500k of the stock. The stock is down 30% in the last six months in the software sell-off

• Director at WD-40 (WDFC) bought $105k of the stock. He also bought back in October

• Director bought $1M of the dip at Abbott Labs (ABT). The CEO also bought $2M of the stock a couple of weeks ago

• All the insiders are selling Merck (MRK). 8 insiders sold $22.6m of the stock

• CEO at Viavi Solutions (VIAV) sold another $1.85M of the stock. His 3rd sale this month for $5.54M total. The stock is up 100% in the last year

• CEO at Colgate-Palmolive (CL) sold $4.28M of the stock. It's his first non-tax sale since 2017

• CEO at Ameriprise Financial (AMP) sold $26.6M (largest sale, out of 59). This decreased their holdings by 30%.

• and more…

Commentary

Friday wrapped up what is likely the best week at CEO Watcher so far.

We finished the week with a 30% one-day gain in Lumentum after finding the CEO buying $500k of the stock (keep reading to learn why I believe this specific insider purchase led to a rally), and the CEO Watcher Portfolio finished the week nearly 7 points ahead of the S&P.

The CEO Watcher High Signal List (which contains all of the stocks we have marked as high signal since we started the list in September) also had a pretty good week and beat the S&P by 1 point.

On Thursday night at 5:34pm, an alert came in to the Discord that the CEO at Lumen Technologies (LUMN) bought $500k of the stock.

The stock was trading around $6.29 at that time.

The next morning, I shared the below note with CEO Watcher Premium subs and announced that we added Lumen to the CEO Watcher portfolio (cost basis of $6.45, as I actually didn’t buy it until Friday morning).

A few subscribers asked why I believe that this specific CEO purchase led to a massive rally in the stock.

It’s impossible to know how much of the 30% gain was due to investors copying the CEO versus other market factors, but I believe it played a part.

We’ve recently seen a few insider purchases lead to stock pops at large, well-known companies in a hot sector.

The first was a director at Micron (MU), who was also the former chairman at TSMC, filing a $7.8M purchase of the stock on January 15th. The stock jumped 10%, though it gave back all of the gains throughout the day as the market struggled.

The second was a dip buy by the CFO at Intel (INTC) after earnings. The stock jumped 11% on this news.

These purchases and subsequent pops demonstrate the number 1 factor for determining if an insider purchase is likely to immediately drive a stock price increase - the popularity of the stock.

At the end of the day, stock prices go up when there is more money buying the stock than selling.

The insider purchases that garner the most attention are the most likely to drive more demand for the stock, and insider purchases at popular companies in popular industries often get the most media attention.

The next factor is the actual insider purchase itself. Again, the question is simply: “Which type of purchase is likely to gain the most attention?”

The basic rules of thumb here are:

1. Larger purchases attract more attention than smaller purchases

2. Famous insiders attract more attention than no-name insiders

3. Insiders with prominent titles (like CEO and CFO) attract more attention than random VPs

The final factor is the overall market itself. The Micron (MU) insider purchase came on a very weak day in the market, and the stock gave back all of its gains. The Intel (INTC) insider purchase came on a fairly flat day in the market, and the stock kept all of its gain. The Lumen (LUMN) insider purchase came on a very strong day, and the stock significantly added to its gains throughout the day.

So, the three factors in determining if an insider purchase will lead to an immediate stock pop:

1. The popularity of the company (and the industry)

2. The popularity of the insider

3. The strength of the market

You are basically just trying to guess if the insider purchase is likely to get a lot of news coverage and then hoping for a strong day in the market.

However, while these purchases are fun, the bulk of the upside from tracking insider trading comes from finding undervalued stocks that insiders are buying (typically after a stock price dip) and holding those stocks for many months (preferably, more than one year).

keep scrolling. top trades + all of the charts and data below

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