Apr 1, 2022
While we adhere to strict editorial guidelines, partners on this page may provide us earnings.
Listening to earnings conference calls can be a good way to learn about a company’s business.
But talk is often cheap. Generally speaking, management tends to be overly optimistic about their company’s prospects.
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Here’s a simple way to gain more valuable insight: Take a look at insider buying and selling activity.
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Insiders know more about their business, competition, future prospects and risks than the public. If management is willing to use their own money to buy shares of the company, that’s a more genuine vote of confidence.
Investing legend Peter Lynch once said, “Insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.”
Let’s take a look at three stocks that insiders have recently loaded up on.
Eastman Kodak (KODK)
As a company that made its name through products related to analog photography, Eastman Kodak may not seem relevant in this digital age.
Yet in 2022 — a time when the broad market is experiencing a pullback — Kodak shares have soared 38%.
The company’s latest earnings report cheered up investors. In 2021, revenue grew 11.8% year over year to $1.15 billion. It also generated operational EBITDA of $11 million, marking a significant improvement from a loss of $1 million in 2020.
Insiders are getting in on the action, too.
On Mar. 18, Kodak director David Chene acquired 2,434,179 shares of the company for a total of $14.06 million. On Mar. 21, Chene spent another $1.54 million buying 250,693 shares.
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Cano Health (CANO)
Cano Health is a healthcare provider with more than 250,000 members. It operates primary care medical centers and supports affiliated providers in eight states and Puerto Rico.
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Business has been growing rapidly. In 2021, revenue rose 94% year over year to $1.6 billion.
Management also raised their guidance. For 2022, they expect total revenue in the range of $2.8 billion to $2.9 billion, which would represent a substantial improvement from 2021. Membership is projected to reach 290,000 to 295,000.
But the stock hasn’t been a hot commodity. Year to date, Cano Health shares have plunged 32%, giving contrarian investors something to think about.
One of Cano’s directors, Lewis Gold, certainly sees value in the stock right now.
On Mar. 17, Gold bought 300,000 shares of the company at a price of $6.81 per share. The purchase cost $2.04 million.
GameStop (GME)
Last but certainly not least, we have GameStop.
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A little more than one year after the meme stock frenzy of early 2021, the video game retailer is making headlines again. From Mar. 14 to Mar. 28, the stock went from $78.11 to $189.59, marking a 142% gain in just two weeks.
In the company’s most recent quarter, net sales grew 6.2% year over year to $2.254 billion. Its membership program PowerUp Rewards Pro grew by 32% and now has approximately 5.8 million members.
GameStop also struck new deals and expanded brand relationships with PC gaming companies including Alienware, Corsair and Lenovo.
On Mar. 22, GameStop chairman Ryan Cohen bought 100,000 shares of the company for a total of $10.2 million. The purchase also boosts Cohen’s stake in the company to 11.9%.
Cohen, the billionaire founder of online pet products retailer Chewy (CHWY), became chairman of GameStop’s board in April 2021.
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Jing is an investment reporter for Moneywise. He is an avid advocate of investing for passive income. Despite the ups and downs he’s been through with the markets, Jing believes that you can generate a steadily increasing income stream by investing in high quality companies.
