I like to keep a close eye on which shares have experienced meaningful insider buying.
This is because insider buying is often regarded as a bullish indicator, as few people know a company and its intrinsic value better than its own directors.
A number of shares have reported meaningful insider buying this week. Here are a couple which have caught my eye:
Adairs Ltd (ASX: ADH)
According to a change of director’s interest notice, one of this homewares retailer’s independent non-executive directors has been buying shares this month. The notice reveals that Independent Non-Executive Director Kiera Grant picked up 106,000 shares through an on-market trade on 15 May. The director paid a total of $150,339.80 for the shares, which equates to an average of $1.42 per share. This purchase lifted Grant’s holding to a total of 142,572 shares.
Earlier this month, Adairs revealed that its online sales grew a massive 221% while its stores were closed because of the pandemic. Judging by the investment, it appears as though this director is confident its strong form can continue.
Medibank Private Ltd (ASX: MPL)
A change of director’s interest notice reveals that one of this private health insurer’s independent non-executive directors has made a sizeable purchase of shares in May. According to the notice, Tracey Batten picked up 15,715 shares through an on-market trade on 14 May. Batten paid an average of $2.85 per share, which is slightly higher than today’s price. This works out to be a total consideration of just under $45,000 and lifts the director’s holding to a total of 50,000 shares.
This purchase price represents a 22.5% discount to Medibank’s 52-week high. Which appears to be a level this director thinks is good value. One broker that might agree is Credit Suisse. Earlier this month it put an outperform rating and $3.00 price target on the company’s shares.
Finally, I wouldn’t be surprised if insiders are buying the five shares listed below. They all look like bargain buys after the market crash…
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More reading
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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