It's widely believed that insiders know how well a company is operating. Therefore, when insiders are actively buying their stock, it is assumed they must know something that's motivating them to buy shares. This belief tends to manifest itself in more buying by the public. Whether it results in good news is debatable. However, when insiders purchase large amounts of shares, it's something worth paying attention to. It indicates that the insiders may feel the stock is a bargain. Here are 3 stocks when an insider bought millions of dollars worth of stock.
Clarivate: Director Buys $11.64 Million of Stock in this Data Analytics Firm
Global information services company Clarivate (NYSE: CLVT) provides a wide range of data and analytics services for a broad range of industries. The computer and technology sector leader offers a comprehensive, integrated suite of AI tools and products that spans the entire innovation lifecycle from R&D to commercialization to IP management, helping enterprises make data-driven decisions. The business has been in a downdraft along with its shares. The company has replaced its CEO three times in the past five years.
CEO Transition Pulls Previous Guidance
On Nov. 6, 2024, Clarivate reported disappointing third-quarter 2024 results; The company reported EPS of 19 cents, matching consensus estimates. Revenues fell 3.9% YoY to $622.2 million, falling short of $640.81 million. The performance was one of the worst in its history. The company also withdrew its previous outlooks due to the CEO transition and work being done under the Value Creation Plan.
On Nov. 11, 2024, director Michael Angelakis purchased 2.27 million shares of CLVT between $5.11 and $5.19 for a total of $11.64 million.
Prospect Capital: An Income-Generating BDC Paying an 11.92% Yield
Prospect Capital Co. (NASDAQ: PSEC) is a business development company (BDC) that invests in privately owned middle-market companies by offering various debt and equity financing solutions. The company offers secured loans, senior loans, subordinated debt, preferred and common equity, and mezzanine debt. The company seeks a high rate of return for its shareholders and invests in companies in industries ranging from energy, healthcare, manufacturing and telecommunications.
Prospect Capital invested over $21 billion in over 400 investments in 117 current portfolio companies in over 33 industries. Companies typically generate revenues between $50 million to $500 million. As a BDC, Prospect is required to distribute at least 90% of its taxable income to shareholders, which is why its 11.92% dividend seems so high. It actually trimmed its dividend by 25%.
On Nov. 29, 2024, Prospect Capital COO M. Grier Eliasek purchased 210,000 shares, around $4.81 per share, for just over $1 million. On Nov. 22, 2024, CEO John Barry purchased 1 million shares at $4.78 per share for $4.78 million.
Nine Energy Service: Providing Completion Services to the Oil and Gas Industry
Onshore energy completion services provider Nine Energy Service Inc. (NYSE: NINE) offers cementing services for unconventional oil and gas developments. It also provides a number of completion tool products, ranging from linear hangers to frac plugs and floatation devices. The incoming Trump administration is anticipated to increase fracking on federal lands, as Trump has repeatedly stated, "Drill, baby drill."
On Oct. 31, 2024, New Energy reported Q3 2024 revenue of $138.2 million, coming above its $127 million to $137 million previous guidance. Adjusted EBITDA was $14.3 million, which rose 47% sequentially. The net loss was $10.1 million, and the diluted EPS loss was 26 cents. Incremental adjusted EBITDA margins were 79%. New Energy had cash and cash equivalents of $15.7 million and $27.6 million available under its revolver for a total liquidity position of $43.3 million.
Nine Energy Services CEO Ann Fox commented, "Nine is well positioned in the natural gas basins, as well as throughout the US, to capitalize on an improving market. We have seen our earnings respond significantly and quickly with increased market activity. I believe our service and commodity diversity are critical and that we are differentiated through our technology and service offerings. Our strategy of providing an asset-light business with forward-leaning technology is unchanged, and we will continue to focus on increasing profitability in whatever market we are faced with."
On Nov. 21, 2024, 10% beneficial shareholder William Monroe purchased 695,000 shares between $1.19 to 1.24 cents for around $839,000.
