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Elon Musk and His Rare Insider Trading Signal

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What do Elon Musk and Mary Dillon have in common?

Both are CEOs who have bought shares of their own companies just before the share prices moved higher.

You have probably heard of Elon Musk, the CEO of Tesla. In 2013, he made a big statement by buying over a million shares of Tesla stock for $100 million even though he already had plenty of shares.

Musk went out on the limb even further, as he had to borrow the money from Goldman Sachs to buy the shares. He used his previous holdings in Tesla, and stakes in other companies, as collateral.

Since the May 2013 purchase, shares of Tesla are up over 500%.

But who is Mary Dillon?

She’s the President and CEO of Ulta Beauty, a cosmetics and beauty product retailer with stores across the United States.

The CEO of Ulta bought nearly a million dollars of shares on the open market in March 2014 and September 2014.

Since the March 2014 purchase, shares are up 216%.

Doubling Down in 2019

But these two CEOs didn’t stop there.

In 2019, after the shares of both Ulta and Tesla took a dive, both CEOs saw yet another buying opportunity.

Dillon, the CEO of Ulta, bought $300,000 worth of shares in September. It was her first open market purchase since the 2014 buys.

Musk, Tesla’s CEO, bought $25 million in May 2019.

These CEOs were doubling down on their own companies in 2019.

And Musk didn’t stop there. In 2020 he was at it again.

On Feb 14, 2020, he bought yet another $10 million worth of stock, even though the shares had soared to $767.

This is a rare insider trading signal: the insider who steps in to buy again.

Insider Buying Sends a Strong Signal 

Why would these two CEOs spend so much of their money on their own companies’ stock, and double down again last year, when they already own a ton shares already? 

Greed! 

Pure and simple. 

The opportunity to make more money motivates people- even people who are already billionaires like Elon Musk.

If top insiders are buying, it’s because they know something very good is going on at the company. Maybe it is a new product. Or contract. Or pending merger. 

Whatever the reason, they are very confident that shares will be on the rise. After all, who would buy more stock in a company if they knew it was sinking???  

More . . .


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These Insiders Know Something You Don't

Why are insiders suddenly buying up company stock shares with their own money?

According to legendary investor Peter Lynch, that when major officers buy shares of their own companies, there’s only one reason: They expect the stock price to go up.

Zacks distilled a handful of the most compelling insider stock purchases, and is opening them to public view – but only until Sunday, March 1.

See the stocks now >>

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Buy When the Insiders Buy

When high level insiders buy, they are required to report the purchases to the SEC within 48 hours of the trade. The trade then becomes public information.

Hedge funds and other professional investors routinely use this information to get an edge on their trades.

For most of us, though, it’s not easy to get access to the insider information.  While the media will trumpet huge insider buys like Elon Musk’s $100 million purchase, did you hear anything about Mary Dillon’s $300,000 purchase in September 2019?

The challenge is getting easy and reliable access to all the insider trades and then figuring out which ones to buy.

Where to Find the Insider Buys

Anyone can go on the SEC website and get the insider trading information but it’s time consuming to search by individual companies.

Some investment firms collect the insider buying data and can provide it to you as a weekly list. Have you ever seen one of those lists?  The sheer number of companies can be overwhelming.

In some instances, the insiders have been known to buy en masse. Then what’s an investor to do?

This happened during the stock market dip in August 2011. As stock prices fell, insiders felt that their companies were undervalued and rushed out to buy shares.

That August, insiders bought stock in 50 different S&P 500 companies in just one week. Even if you got a list of those stocks, how would you narrow it down to the stocks that were truly worth buying?

To solve this problem, our Zacks research team developed a strategy that monitors selected insider buying activity at companies that already show strong earnings and excellent valuations. We do the work of sifting through all the insider buys so you don’t have to.

How to Take Advantage of Insider Buying in Today’s Market 

Just a handful of stocks meet the demanding criteria of our Zacks’ Insider Trader. Right now, we’ve narrowed it down to 7 insider buys that make the grade – including a major “cluster buy” we added earlier this month.

Four officers of a small-cap financial firm – including the CEO, President and Global Head of Research – invested more than $1 million into their company’s stock. These insiders have also purchased shares multiple times on the open market, which is a particularly bullish signal.

This is an opportunity that's worth looking into!

Plus, as a bonus for exploring insider moves like this, you are invited to download Zacks' Special Report, 5 Stocks Set to Double free of charge. These 5 longer-term trades balance our more active Insider Trader moves. Each is the #1 favorite of a Zacks expert for its potential to jump +100% or more over the next year.

Important note: Access to the Insider Trader portfolio and Special Report is limited. This opportunity ends midnight Sunday, March 1.

See our insider trades and download 5 Stocks Set to Double now >>

Best,

Tracey Ryniec
Insider Stocks Strategist

Tracey Ryniec, Zacks' insider and value strategist, is Editor in Charge of the Insider Trader.