There’s ample evidence that corporate insiders outperform the market when buying shares in their own companies
For years, academics have considered whether insider trading can predict future stock performance and there is ample evidence to suggest that corporate insiders outperform the market when buying shares in their own companies.
To be sure, company insiders buy stock for a range of different reasons. Sometimes they buy because they think the stock is undervalued, they could buy to boost investor confidence that management is aligned with shareholder objectives or they might even know something that ordinary retail investors don’t.
Whatever the reasons, the Fintel Insider Sentiment quant model identifies US stocks that have experienced significant insider buying activity over the last 90 days.
The multi-factor quant score is calculated by analyzing the number of insiders purchasing stock, the percentage of the float that has been purchased and the change in share price versus the average purchase price of the insiders.
The 10 Stocks With The Highest Insider Sentiment Score
Let's take a look at the 10 stocks with the highest insider sentiment score with a brief overview of recent developments.
Iovance Biotherapeutics Inc (NASDAQ:IOVA) ranks in 10th spot on the Insider Sentiment leaderboard with a score of 97.84. Three insiders have bought net $65.19 million worth of shares in the last 90 days, equating to 8.57% of the total float. The average purchase price from these shares was $6.50 which gives an average return of 7.71% based on the recent closing price.
Precigen Inc (NASDAQ:PGEN) has the ninth-highest insider score of 98.12. Five net insiders have bought $20.16 million worth of PGEN shares over the last 90 days, representing 8.86% of the total float. The average purchase price of the shares paid was $1.75. The insiders are down 31.4% based on the average purchase price.
Eterna Therapeutics Inc (NASDAQ:ERNA) ranks eighth in the latest list, with a score of 98.17, with three net insiders buying stock in the last 90 days. These insiders have bought a whopping 26.78% of the total float at an average purchase price of $3.28 per share as part of a recent equity raising that was announced in November. Based on the average purchase price, these insiders have made an 11.3% return.
Dave & Buster's Entertainment
Dave & Buster's Entertainment Inc (NASDAQ:PLAY) is seventh on the list, with an insider sentiment score of 98.23 based on six net insiders buying stock in the last three months. The insiders have bought $62.65 million shares in total, equating to around 4.58% of the float at an average purchase price of $34.39 per share. The insiders are up around 17.3% based on the recent closing price.
Aziyo Biologics (NASDAQ:AZYO) has the sixth-highest insider score, 98.43, with five net insiders buying around $4.03 million worth of stock in the last three months. The insiders have purchased approx 11.47% of the float with an average purchase price of $4.72.
Some of the shares were purchased as part of the $4.75 per share capital raising announced in early December, however, there were also market purchases at varying prices. The insiders are down 9.6% based on the average purchase price and recent closing price.
Mineralys Therapeutics Inc (NASDAQ:MLYS) is fifth on the list with a score of 98.69 and has seen five insiders buying net $44.1 million worth of shares at $16 each. The insiders purchased shares as part of the company’s IPO which was priced at $16. The insiders have seen a 17.9% return based on the most recent share price.
Comera Life Sciences
Comera Life Sciences Holdings Inc (NASDAQ:CMRA) has the fourth-highest insider score of 99.01 with eight insiders buying shares in the last 90 days. Those insiders have purchased $1.37 million worth of shares in the company equating to around 13% of the float.
They bought the stock while participating in the $3.6 million private placement that was completed in January at $1.23 per share. CMRA shares rallied more than 50% on news of the placement but have sold down following the deal back to the capital raising price.
DIRTT Environmental Solutions
DIRTT Environmental Solutions (NASDAQ:DRTT), with an insider sentiment score of 99.01, matches CMRA. But we rank them third for the larger net purchase, as six insiders bought $2.20 million worth of stock in the last 90 days. That equated to 17.01% of the total float.
The insiders paid an average purchase price of 32 cents per share across several purchases in December and have seen paper profits of more than 110% based on the most recent closing price of 67 cents.
SMG Industries Inc (OTCMKTS:SMGI) is number two on the list, with an insider sentiment score of 99.14. Four insiders have purchased net 55.43% of the float in recent months.
Cadiz Inc (NASDAQ:CDZI) tops the list with an insider sentiment score of 99.14, based on six net insiders buying $14.36 million worth of stock in the past 90 days. That's about 11.75% of the float, with an average purchase price of $3.80 per share. With shares trading around $4.20 per share, the insiders seen around 11% gains, on average.
A significant portion of the purchases were made by insider Heerema International Group as part of the company’s recent $40 million capital raising that was announced at the end of January and was completed at $3.84 per share.
Article by Ben Ward, Fintel