While stocks like Occidental Petroleum and Rivian Automotive are ranked No. 1 and No. 2 regarding insider volume, they are not the most actively bought stocks by insiders.
Warren Buffett and Berkshire Hathaway are almost entirely responsible for insider buying at OXY, while Rivian just got a significant injection by the Saudi PIF. Both are good names and attractive speculations. Still, names like Simmons First National, East West Bancorp and Comtech Telecommunications are the most actively bought stocks by insiders regarding the number of insiders buying.
These stocks rank No. 1, No. 2 and No. 3 regarding the number of insiders buying, which is a more telling sign of insider confidence. Those stats compound by the number of transactions made, which indicates that insiders are not only buying but also coming back for more.
Simmons First National: First for Insiders
Simmons First National's insider activity is bearish on balance for the last 12 months, but we want to focus on the timing of activity. The selling came before the financial sector imploded in early 2023 and is primarily a single director.
The buying came after the financial sector imploded, making Q2 2023 the strongest quarter for insider buying in over five years. Six insiders, including the board chairman, two directors, the CEO and two EVPs made nine transactions since the stock price imploded. They've got the total to about 1.76% of the stock and the highest level in over a year.
The institutions don't own a lot of Simmons First National, but their activity is also telling. The institutions only own about 13% of the stock, but their buying spiked in Q1 and Q2, putting the balance of activity at nearly 3:1. That could be because of the value or the dividend, which are compelling. The Arkansas-based bank trades at only 9.5x its earnings and yields over 4.5%. The payout is about 25% of the 2023 earnings outlook and less than 20% of the 2024 outlook and appears safe. Shares of the stock are at their bottom and ready to rebound.
East West Bancorp Grows its Payout
East West Bancorp is a Pasadena-based institution that may come with more risk due to its exposure to west coast markets, but you wouldn't be able to tell by the insider activity. Insider activity is similar to Simmons First National in that there was selling before the financial sector collapsed, and it switched to buying afterward. Six insiders have made seven purchases, including two by the CFO and one each for two directors, the CEO, an EVP and the COO. Their buying is bolstered by the institutions which own a whopping 87% of the stock. The institutional activity is mixed but ramping and bullish on balance for three consecutive quarters.
Comtech Telecommunications Telegraphs a Bottom
Comtech Telecommunications is a satellite-services company telegraphing a bottom. The company has six insiders buying in 2023 and they've made nine transactions, including two by the CEO and three by a director. Other insiders buying this stock include the COO, CFO, and legal counsel, who've helped get total ownership up to nearly 4.5%. Institutions are also buying the name.
Shares of Comtech are trading at a 20-year low and show signs of a bottom. The price action has bounced from $8.30 and is moving higher. If the market follows through on the signal, the stock could gain 10% to 20% over the next few months.