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We know from history that insider buying works. When well-informed corporate insiders buy and sell stocks they know, these individuals beat the markets by a country mile. Since 2010, C-level executives buying shares of their companies have generated a 24% annualized return… turning every $10,000 into $200,000.
The same principle also works with members of Congress. In February, for instance, Rep. Bill Keating, a Democrat from Massachusetts, sold shares of Boeing (NYSE:BA) at $207 a day before the Department of Justice announced it was opening an investigation into the aircraft manufacturer. Shares traded as low as $164 over the following two weeks. According to a study by Unusual Whales, Senate Democrats on average saw their investments rise 33% in 2023. Among Senate Republicans, that figure was 65%.
Of course, some of these trades border on illegal. Why should a judge overseeing a trademark case be allowed to buy shares in one of the companies appearing before him? Or why should a chief medical officer at a biotech startup be able to buy shares in her firm before official clinical trial results are released?
But the U.S. Securities and Exchange Commission (SEC) has long determined that these types of transactions are above the law. As long as insiders report their transactions and avoid trading during certain “blackout” periods, they’re free to use personal knowledge to turn small investments into millions.
These are the types of transactions that usually fly under the radar. Unearthing these filings is often a manual task, and it’s difficult to tell the difference between informed transactions and noise.
Fortunately, the writers at InvestorPlace.com – our free news and analysis site – have their eyes on insider buying. And in today’s Digest, they bring us five prime examples.
SoFi (SOFI)
SoFi logo sign on headquarters facade. Social Finance is an online personal finance company.
Source: Michael Vi / Shutterstock.com
SoFi Technologies (NASDAQ:SOFI) CEO Anthony Noto is a surprisingly consistent buyer of his company’s shares. Since 2023, the 56-year-old finance veteran has purchased $3.4 million worth of stock across 11 transactions.
And the most interesting thing? He’s only ever bought when shares approach book value.
That’s notable because some banks can consistently trade below that benchmark figure. Higher-than-expected charge-offs or nonperforming loans (NPLs) can quickly push positive equity into negative territory, so low-quality banks tend to trade at significant discounts to book. (A 10% write-off in asset value would technically wipe out the entire equity value of a 10x leveraged bank).
On the other hand, SoFi’s shares routinely trade as high as 2x book value – a fact that has rewarded some of Noto’s purchases with 100%-plus returns. And a recent $200,000 purchase on May 24 suggests that SoFi’s recent selloff has now gone too far.
InvestorPlace.com’s Rich Duprey sees similar upside. In an update this week, he notes that SoFi’s current 1.2x book value makes it a slam dunk stock to buy without hesitation.
SoFi is maturing and is taking a more conservative approach to its balance sheet… deposits now account for 82% of SoFi’s funding structure helping to fuel net interest margin expansion to 5.91%, a 430 basis point improvement.
That’s because SoFi is transitioning into a mature bank that can generate income in both good times and bad. Whereas much of Wall Street continues to see SoFi as a risky play on loan origination income, insiders are valuing the company more along the lines of a high-quality earner.
Hain Celestial (HAIN)
The logo for Hain Celestial (HAIN) displayed on a smartphone screen in front of an American flag.
Source: IgorGolovniov / Shutterstock.com
Food-related companies are a notoriously cyclical group. Culinary fads come and go, and startups specializing in a certain niche can sometimes see their markets disappear overnight. (Anyone remember gluten-free?) Only the largest diversified conglomerates seem to last.
That’s why a recent spate of buying by insiders at Hain Celestial (NASDAQ:HAIN) is so noteworthy. In mid-May, the natural foods firm’s CEO, chief financial officer, and president bought a combined 28,500 shares in the $7 range. This comes after an 83% drop in share price since 2021.
Hain’s decline is easy to explain. Interest in veganism began to wane after 2020, and Hain specializes in the types of products that cater to this crowd. The company owns brands like Terra Chips, Garden Veggie Snacks, and Celestial Seasonings teas.
A recent uptick in insider purchasing, however, suggests that the worst may finally be over. During their third-quarter earnings call, management noted that 85% of Hain’s products are now growing again. Interest in dairy-free milk alternatives is improving, and demand for healthy snack foods is bottoming out. Analysts expect this fiscal year’s -3.4% decline in revenues will be followed by a return to growth next year.
In a recent update, InvestorPlace.com’s Josh Enomoto agrees. He notes that Hain Celestial is projected to return to 2022 levels of revenues and profits, which potentially gives the firm 2x upside.
On the revenue front, experts are forecasting revenue of $1.81 billion. That’s only half-a-percent up from the prior year. Nevertheless, fiscal 2025 could help rejuvenate the business, with sales projected to hit $1.86 billion.
Shutterstock (SSTK)
Neon sign of the Shutterstock logo glowing against an exposed brick wall in the San Francisco office of Shutterstock, Inc. (NYSE: SSTK).
Source: Nova Patch / Shutterstock.com
Earlier this year at InvestorPlace.com, Rich Duprey highlighted stock image firm Shutterstock (NYSE:SSTK) as an unstoppable S&P 600 company to buy. A 38% decline in share price was beginning to make SSTK look irresistible, and a partnership with OpenAI created the opportunity for future growth. As Duprey noted back in February:
It’s going to be a long road to regain SSTK stock’s previous highs but Shutterstock now trades at significant discounts. Shares go for 12 times earnings estimates and a fraction of Wall Street’s expectations for earnings growth. With the stock also valued at just 14x the free cash flow it produces, Shutterstock is cheap and on a path to recovery.
The only question was when the tide would turn. Shutterstock’s momentum was so negative that timing any purchase was more a matter of luck than skill.
A sudden burst of insider buying suggests that now is the right time to jump in. Last week, the company’s CEO and CFO made a series of purchases totaling almost 18,000 shares. It’s their first-ever purchase of company stock and was made just as shares were bottoming out in the $37-$38 range.
Analysts are also beginning to grow more bullish about Shutterstock’s prospects. Over the past 30 days, analysts have revised their 2025 earnings projections up 8%. Profits are now expected to surge 18% next year.
Together, that tells us that not only is Shutterstock cheap, but that agreements with OpenAI and other partners might finally put this company back on a faster growth track.
GEE Group (JOB)
Newspapers: everyday searching for job and business opportunities. Jobs report data, possible stock market crash
Source: Mykola Komarovskyy / Shutterstock.com
Job placement companies have long been a rich source of “buy the dip” opportunities. These firms are highly cyclical, and even small economic changes can have enormous impacts on their bottom line. When enterprises begin to hire, their demand typically comes in all at once… and well ahead of any government-based jobs numbers.
That’s why a recent spate of insider buying at GEE Group (NYSE:JOB) should put investors on alert. Over the past two weeks, four directors and the CFO have bought 360,000 shares of this sub-$1 company, suggesting that shares now have enough upside to make it a “buy.”
The stock is currently trading at 35 cents per share, which implies a market capitalization of $38.2 million, making it a great option in high-potential penny stocks to buy. Moreover, shares are trading at 5.8x forward earnings, while its enterprise value is only 2.0x forward EBITDA. Both of these metrics imply the company is trading cheaply relatively to the profits it’s generating. Investors looking for exposure to a labor market that remains robust should definitely consider adding shares of JOB to their portfolio.
An improvement in hiring could put GEE Group’s profitability into overdrive. Wall Street analysts believe that a 20% increase in revenues will raise net income 10-fold, thanks to the company’s high operating leverage. (Much of GEE Group’s costs are fixed overheads.) And if improved hiring in 2025 makes that happen, then JOB is trading closer to 3.5X forward earnings, not 5.8X.
Sunoco (SUN)
Image of a Sunoco gas station in Orlando, Florida
Source: Alex Pesantes / Shutterstock
Finally, a recent flurry of M&A activity in the energy segment seems to have put other oil executives on alert. And perhaps the most notable case this week was insider purchasing at Sunoco (NYSE:SUN), a fuel distribution company with over 10,000 customer locations nationwide.
Between May 23 and 24, the company’s CEO, chief operating officer, and chief sales officer bought a combined 10,000 shares of their firm. It’s Sunoco’s first major insider purchase since 2022 and comes just as gasoline prices are rising for the summer. In fact, demand is shaping up to be so strong this year that Louis Navellier just added two energy companies to his Accelerated Profits portfolio (subscription required). He recommends buying before the summer driving season begins.
Sunoco’s executives also have a strong history of insider transactions. CEO Joeseph Kim has returned 69% on average though buying shares of his company. The COO and CSO each returned 195% from their only 2020 purchase.
The firm also recently finalized its acquisition of NuStar Energy, a midstream provider of oil storage facilities and pipelines. This gives Sunoco far greater vertical integration, and analysts believe earnings per share will now surge 90% this year and another 10% the next.
Playing the Game
The phrase “If you can’t beat ’em… join ’em” is often credited to James E. Watson, the U.S. Senate majority leader between 1929 and 1933. It was often used as practical advice for aspiring politicians and has remained a time-tested strategy in Washington politics.
The same strategy also works with investing. We might not know why a particular insider (or politician) is buying or selling… but history tells us that those “in the know” will generally do better than their peers.
Of course, Congressional insider buying isn’t the only way you can follow D.C. money to investment gains. There’s also legislation and spending.
Louis Navellier, in fact, believes the upcoming presidential election could spark a Second Wave of the AI boom…
It all has to do with an executive order that Louis believes Donald Trump will issue if he wins in November. And it could hand massive gains to a small subset of AI stocks.
Louis believes this because Trump issued an executive order in his previous presidency that laid the foundation for the current AI boom. It facilitated significant advancements, such as the world’s most powerful supercomputer and the success of ChatGPT.
So, as the election draws near, you’ll want to be prepared. That’s why Louis has flagged a handful of AI stocks that he believes could soar from Day 1 of Trump’s presidency – or even sooner.
To lay all this out, Louis recently released three special reports to his Growth Investorsubscribers that provide research on the companies that he believes are poised to profit from the Second Wave of the AI Boom if Trump is reelected.
On the date of publication, Thomas Yeung did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Thomas Yeung is a market analyst and portfolio manager of the Omnia Portfolio, the highest-tier subscription at InvestorPlace. He is the former editor of Tom Yeung’s Profit & Protection, a free e-letter about investing to profit in good times and protecting gains during the bad.
