In a year when most investors took heavy losses, some corporate executives earned big returns on timely purchases of their own stock. A report from data analytics firm Verity shows that some corporate insiders made stock buys this year that have already doubled in value. Many professional investors track insider buying and selling as a measure of a company’s quality. The reasoning goes that executives and board members who are more confident about the direction of their company will buy up more shares if they think the stock is undervalued. Verity compiled insider-buying data from securities filings to show the best insider stock buys of the year. The biggest gain on a purchase came from James B. Archer, the CEO of Target Hospitality . Archer bought nearly $200 worth of shares in March, and then the stock surged in July after the company sharply raised its revenue guidance. Most of the top performers are from relatively small companies, where single news events can more easily lead to major returns. “A lot of the best performing buys, you get in the Russell 2000. They were largely at biotech and pharma, and there’s even a couple of energy names in there. Not surprising. In a down market like this, usually the best performers, in terms of insider buying, will be companies that have binary events … or if there is some sort of big macro event going on,” said Ben Silverman, director of research at Verity. Some notable insiders buying at biotech companies include AbCellera Biologics CFO Andrew Booth and Iveric Bio director Calvin Roberts. Silverman said that investors should pay more attention to the track record of insiders than the size of their individual purchases. “One of the things that people miss sometimes, especially with the buying, is they focus not enough on who the person is and the history and too much on the numbers how much they bought, for example. Quite often, the best performing insider buys are not the flashiest,” Silverman said. He said investors should consider the total compensation for an executive when considering how much weight to put behind a stock purchase. However, there were some leaders of S & P 500 companies who also made larger buys that proved timely, including Starbucks interim CEO Howard Schultz. Schultz purchased about $15 million worth of Starbucks stock in May, shortly after returning to the company as interim CEO. The coffee chain’s stock has gained more than 40% since then. Autoparts insiders also proved to be savvy buyers this year. The top two insider buys in the S & P 500 came from directors of Genuine Parts . Despite these successful buys, corporate insiders on the whole appeared to be hesitant to make trades this year, Silverman said. “We were surprised by the lack of buying. Buy levels were not unusual, and when the market pulls back like this, we’ve historically seen a critical mass of insider buying,” Silverman said, adding that 2022 was also on track to have the least number of insider sellers since 2004.
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