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Insider trading offers a rare glimpse into the internal sentiments about the company. By thoroughly studying insider transactions you can gauge the level of confidence posed by the company management in its policies and future direction.
For a more thorough analysis, I generally look at the insider transactions happened in the past 3 or 6 months period. Such analysis provides better data for analysis than a single transaction. If a recent purchase is preceded by a series of insider selling transaction, then I take it as a red flag against the company instead of a sign of confidence. It is also a good idea to look out for the accompanying news to draw out the proper conclusion from the transactions. So let’s take a look at the recent major insider purchases and their significance:
Genesis Energy LP (NYSE:GEL): The company is witnessing a surge in inside transactions. On October 5, 2012, the company CEO Grant Sims bought 216,334 shares at the average price of $30. The transaction amounted to $6.49 million. However, if we look at the past data, there had been more inside selling than buying in the previous 3-months and 12 months time period. Genesis Energy is currently trading at $33.52, up 0.03 percent from its previous close of $28.40. It has traded in the range of $22.64 and $39.95 in the past 52 weeks. However, the stock is trading above its 20 days moving average price and 50 days moving average price of $33.51. The company director James Davison also bought 733,019 shares and 540,547 shares in two different transactions on the same day. These purchase were made at the average price of $30 and amount $21.99 million and $16.216 million respectively. These purchases were part of the transaction involving the stake sale to Davison family. The company is involved in the midstream segment of the oil and gas industry. It is mainly operational in the Gulf Coast region of the United States. Genesis Energy had reported its second quarter Earnings per Share at 23 cents. The stock has Outperform rating from Raymond James and Credit Suisse has also rated it similarly with the price target of $38. The stock has traded in the range of $33.49 and $33.69 in the current trading session. The company’s market capitalization stands at $2.66 billion and the stock’s beta is 0.86.
Tesla Motors Inc. (NASDAQ:TSLA): The company has just received $10 million grant from the state of California for the development of its electric SUV. The funds are likely to be used for buying assembly equipment and for recruiting about 500 workers for building the SUV. Tesla Motors has purchased the equipments for its Fremont factory. The company stock is currently trading at $28.51, up 0.53 percent from its previous close of $28.40. The stock had opened at $28.94 and has traded in the range of $28.51 and $28.98 in the current trading session. Tesla Motors CEO Elon Musk bought 35,398 shares of the company on October 3, 2012. The stock was bought at the average price of $28.25 and it amounted to $999 K. Elon is not only the company CEO but also is the founder of the company. In the last three months, the company has seen positive trend in its insider trading but over the course of 12 months, the trend turns negative. The company insiders bought 35,398 shares in the past three months whereas they also sold 10,900 shares during the same time period. Tesla Motors stock has Buy rating from Jefferies Group and Barclays Capital also has Overweight rating on the stock. Jefferies has set the price target for the stock at $34. The stock is trading above its 20 days moving average price of $28.52 and 50 days moving average price of $28.44. While the signs are all positive for Tesla, but the company is also suffering from slower-than-anticipated roll out of its Model S. Tesla has lowered its production target for 2012. It now expects to produce 3,225 units, whereas its earlier target stood at 5,000 units. The company delivered 250 cars by the end of September. However, in the electric car segment, the company holds competitive advantage over its competitors. The company cars are more performance oriented than its peers and are designed for premium market.
