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What Were Insiders Buying Like Crazy During Coronavirus Selloff?

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What were you doing when the stock market melted down over coronavirus fears in February and March 2020?

Did you panic?

Or did you buy?

Corporate insiders remained calm and decided to buy stock.

By the thousands.

As the S&P 500 saw its quickest bear market sell-off in history, taking just 20 days to plunge 20%, the insiders jumped in to buy in the largest numbers since 2011.

Why should you care what the insiders are buying?

Insiders already own a ton of their company shares, given as awards and gifts. They buy more when they see an opportunity to make money.

Insiders are just like you and I.

They’re greedy.

The opportunity to make money motivates people- even people who are already well-off, like highly paid CEOs, CFOs and directors.

And the speed, and magnitude, of the coronavirus sell-off created an opportunity they couldn’t resist.

Insiders Love to Get Deals

Insiders like deals. They look for sell-offs so extreme that it would be crazy NOT to buy.

After all, who knows the company better than those who run it?

With all the uncertainty, the February and March coronavirus sell-off wasn’t based on business fundamentals. It was based on fear. 

That meant many stocks fell far below what made logical sense to the insiders, based on the business at that time. 

Remember, the state economic shutdowns didn’t hit until mid-March, and many companies were having outstanding first quarters up until that point.

The insiders knew they were getting deals. 

Continue reading. . .


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What Were Insiders Buying Like Crazy During the Coronavirus Sell-Off?

For fans of Microsoft, Amazon, Alphabet, Facebook and Apple, and other big tech growth names that saw weakness during the coronavirus sell-off, but didn’t plunge like the rest of the stock market, you’re out of luck.

Insiders weren’t buying at those big tech names. 

Instead, they mostly jumped into those stocks that fell 50% or more. 

They bought the stocks on sale.

What were those? 

The hated sectors like financials, energy and retail. 

Insiders bought in over a dozen banks including some of the big banks like PNC Financial and Wells Fargo. 

Insiders also dove into energy shares. For example, 3 insiders bought shares in Cimarex Energy, an exploration and production company, whose stock had plunged 71% by mid-March. 

Shares are up 53% since the insiders bought. 

They even dared to buy in some of the retailers. 

An insider at Home Depot bought on the way down during the sell-off, on Mar 9, at $210.78, even though shares didn’t bottom until March 20, down 30% off their 2020 highs. 

That insider is now up 6% on his purchase as the home renovation retailers have posted strong numbers and shares have erased all of their coronavirus losses. 

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 $10 million buy in February 2020, did you hear anything about Glacier Bancorp CEO Randall Chesler’s $100,000 share purchase on March 13, during the coronavirus sell-off?

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.

And during the coronavirus sell-off, with thousands of insiders buying, the number of buys was enormous.

What’s an investor to do? How do they sort through it all to find only the stocks 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 in our Insider Trader portfolio.

We invite you to look into the portfolio now. You'll see 10 live recommendations with substantial upside, including a small-cap financial firm where the 7 insiders snapped up more than 109,000 shares of the company stock. This ticker has surged more than 15% in the past 2 weeks -- and it's positioned to continue climbing higher in the weeks ahead.

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Good Investing,

Tracey Ryniec

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