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Insiders Pound the Table on These Two Stocks
Stock Analysis & Ideas

Insiders Pound the Table on These Two Stocks

Earnings season brings with it volatility. Expectations are set by investors, management’s past guidance, and financial analysts. When these expectations are met, or missed, stocks often experience sudden jolts in share price. Trading these events can be highly lucrative, or detrimental to one’s portfolio. Often, even the most experienced investors can miscalculate a company’s progress and lose hard-earned capital on a trade.  

However, there are groups of people who may know more than the average individual. Insiders, as they’re called, are either people that have over 10% equity in a publicly traded company, sit on a board of directors, or hold a senior officer role. Due to their unique and close position to the center of a firm or industry, they typically have more information to work with.  

While there are multiple kinds of insider transactions, investors are usually only on the lookout for one. The Informative Buy is the most telling because it signals that an insider used capital from their own pockets to invest. If one or more insiders have recently increased their holding positions, it may be beneficial for everyday investors to follow their trades.  

Insider trading may carry with it a pejorative connotation, although it is not necessary illegal. In many cases, an insider must only submit a Form-4 to the Securities and Exchange Commission (SEC) within two days after the trade is executed. Upon approval, the SEC publishes a disclosure, which is made publicly available. This information is widely available, although the real contents can be challenging and work intensive to sift through. 

This is where TipRanks comes into the fold. The financial aggregator has developed algorithms which pore over the disclosed details, which are then organized in a visually digestible format. Users can explore tools like Insiders Hot Stocks and Top 25 Corporate Insiders in order to gain an edge over the market.  

Updated on a rolling basis, the Daily Insider Transactions tool is a great way for users to see which stocks are seeing recent insider activity. Let’s take a look at which stocks have seen significant activity recently.  

LoanDepot 

Stocks can often move with the general trends of the overall market. However, if one were to slide nearly inverse to the major indices, this could signify an internal issue within the foundations of the business. For LoanDepot, Inc. (LDI), it was a string of negative press and uncovered lending schemes which pushed investors away and toward its competition.  

In September 2021, the mortgage and non-mortgage lending company was criticized after skirting regulations for processed loans, effectively lending sums of money out to those who had not proven their ability to uphold financial obligations. The company went public back in February 2021, and since then, its valuation has declined about 70%. While catching a falling knife is difficult, one individual seems to think the stock will move considerably in the other direction, and has put his money where his mouth is.  

Three days ago, Chief Executive Officer Anthony Hsieh purchased $8,720,085 in company stock. According to TipRanks, this purchase of 1,295,021 shares of LoanDepot is the first of such transactions made by the insider since the company went public. Any purchase made that was already on a set schedule or represented exercising options would be identified by TipRanks as an Uninformative Buy, which this purchase was not.  

While the company and its CEO are currently involved in a lawsuit over its side-stepping loan underwriting scheme, shares of the stock are trading near an all-time low. News coming out of the firm is not so rosy, although the firm’s leadership believes it’s a good time to put serious money down.  

Looking beyond Hsieh, the general financial analyst opinion on LDI is bullish. In his recent report, analyst John Davis of Raymond James rated the stock a Buy and assigned a price target of $10. This target represents a possible 12-month upside of 56.01% from current levels. LDI closed trading Friday at a price of $6.41.  

Tandem Diabetes Care  

Biotech stocks can be tricky. Similar to pharmaceuticals, their success is tied to FDA approvals and milestones, but by the time an announcement is made, the new valuation is already priced in. Meanwhile, snapping up shares of a biotech before an event can be risky, as the outcome is binary. If a company’s innovations fail to meet FDA requirements, the firm may collapse altogether. Moreover, it can take years for positive outcomes to materialize.  

Timing the market is difficult, and timing biotech stocks is a whole other ballgame. However, following the insiders can provide clues as to when or what a future outcome may be. 

Tandem Diabetes Care, Inc. (TNDM) is a medical device manufacturing company focused on diabetes treatments and advanced insulin pump devices. The firm recently beat the Wall Street consensus estimates on earnings, and has several upcoming treatments in its pipeline. Its share price has increased a significant 39.75% year-to-date, but some insiders see even more upside on the horizon.  

Over the last five days, four individual insiders have bought shares for their personal portfolios. These include a member of the board, the CFO, CSO, and CAO. Totaling over $2 million, cumulatively, it appears some of the most senior and high-ranking officers in Tandem Diabetes Care believe the stock has more room to run.  

In his recently published report, analyst Larry Biegelsen of Wells Fargo wrote that although “physician office staffing shortages impacted appointment delays,” referral activity has begun to reaccelerate over the month of October. Additionally, the renewal rate of the high-tech insulin pumps has been steadily rising year-over-year.  

Biegelsen rated the stock a Buy, and raised his price target to $137. This comes as a notable increase over his previous target of $121 per share. 

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Insiders’ Hot Stocks, a newly launched tool which identifies stocks that exhibit Strong Buy indicators, based on insider trading. 

Disclosure: At the time of publication, Brock Ladenheim did not have a position in any of the securities mentioned in this article. 

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of Tipranks or its affiliates, and should be considered for informational purposes only. Tipranks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. Tipranks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by Tipranks or its affiliates. Past performance is not indicative of future results, prices or performance. 

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