A heavy insider buying could indicate a bottom in these 2 stocks
Every investor knows that the path to profit is by buying low and selling high. That is a basic precept of any economic trading system. The trick, however, is to recognize when stocks are low enough to buy them. The best time to buy is when stocks bottom out; which will maximize returns when the share price starts to rise again. There are a multitude of possible clues that investors can use to find the minimum price; Today, we’ll take a look at insider buying trends. Insiders, corporate officers, board members, and other “insiders” don’t just run the companies, they know the details. Legally, they are not supposed to exchange that knowledge, or blatantly do so, and the disclosure rules of government regulators help keep insiders honest. However, your honest stock transactions can be very informative. These are the people with the deepest knowledge of particular populations. So when you buy or sell, especially in bulk, take note. In this case, we have used TipRanks Insiders’ Hot Stocks tool to find two stocks that have recently fallen in price, and that fall has coincided with some internal ‘information buying’ operations. Let’s take a closer look. Intercept Pharma (ICPT) We will start in the pharmaceutical sector, with Intercept, a specialist in the treatment of chronic liver diseases. Intercept Pharma is working to develop a treatment for several chronic and serious liver diseases, including primary biliary cholangitis (PBC) and non-alcoholic steatohepatitis (NASH). The company’s main compound, obeticholic acid (OCA), was developed as a CDCA bile acid analog and may play a role in treating liver conditions through the FXR receptor pathway. OCA, also called Ocaliva, has received approval from the FDA in the US and in Europe for use to treat PBC. Intercept has undergone major changes in recent months. First, the company has experienced a churn in top management. As of January 1, the company’s chief operating officer, Jerome Durso, took over as CEO and, earlier this month, CFO Sandip Kapadia announced that he will resign on March 26. measure. On the commercial side, the company reported 4Q20 results at the end of February. The launch showed significant gains in global OCA sales. Fourth quarter net sales reached $ 83.3 million, an increase of 18% year-over-year, and full-year sales grew 25% year-over-year to reach $ 312.7 million. The company provided guidance toward $ 325 million to $ 355 million for OCA net sales in 2021. On a negative note, the EPS net loss in the fourth quarter was worse than expected, coming in at $ 1.58 versus a expected loss of $ 1.47. And while OCA sales were up from last year, quarterly revenue was also below expectations. After the publication of results, the shares fell 19%. That loss added to a difficult 9 months for the Intercept. The stock is down ~ 74% during that period. The losing streak began last June, when the FDA rejected an application for approval of OCA to treat NASH-related liver fibrosis. OCA is currently in extensive phase 3 testing for this condition, to support new applications for approval later this year. There are currently no medications to treat NASH and its complications, and Intercept anticipates that the market could reach $ 5 billion in annual sales. Regarding insider trading, we see that Srinivas Akkaraju of the Board of Directors purchased 237,000 ICPT shares in three tranches between March 10-12. The total cost was $ 5.02 million, and Akkarju’s stake in the company is now worth $ 13.95 million. Looking ahead, Wedbush’s Liana Moussatos remains cautiously optimistic. The 5-star analyst rates ICPT outperforming (i.e. buying), and its $ 88 price target implies an impressive 331% increase over the next 12 months. (To see Moussatos’s history, click here) “We are making multiple adjustments to our model. Management plans to resubmit the OCA / NASH NDA to FDA by YE: 21. As a result, we postponed our US release date for OCA / NASH from 7/15/2022 to 2/15/2023 to allow sufficient time to comply with FDA requirements and commercial preparations. We decreased our estimated treatable PBC population from approximately 34,000 to 32,000 due to the impact of potential changes to OCA / PBC labels for patients reaching the more advanced stages of PBC, ”Moussatos noted. Moussatos is the bullish outlier here; The Wall Street body of analysts is clearly divided on this stock, as the breakdown of the 14 recent reviews shows. These include 6 buys, 7 holds, and 1 sale, making the consensus rating a moderate buy. The stock is priced at $ 20.40, and the median target price of $ 43.33 suggests a 112% rise from that level. (See ICPT stock analysis on TipRanks) Kinsale Capital Group (KNSL) Shifting gears, we move on to the insurance industry, where Kinsale Capital is a provider of surplus and surplus lines insurance products. These are policies that clients purchase to protect themselves against “excessive” risks or risks that are too high for their regular insurance company. Kinsale focuses exclusively on these high-risk insurance products and maintains control of both your claims and underwriting processes. Kinsale has seen significant growth in both revenue and earnings over the past year. On the top line, 4Q20 revenue increased 51% to $ 139.33 million, and EPS, at $ 1.65 per share based on $ 38.2 million in net income, increased 109% over last year. For the full year, Kinsale’s revenue reached $ 459.88 million, a 45% year-over-year gain. Full-year EPS increased from $ 2.86 in 2019 to $ 3.87 in 2020, a 35% year-on-year gain. Revenue and revenue gains were driven by increases in all of the company’s main business segments. For both the quarter and the full year, Kinsale posted significant increases in gross written premiums, net investment income, underwriting income and operating return on equity. The company ended 2020 with $ 1.3 billion in cash and assets invested, 44% more than in December 2019. Despite the reported good results, KNSL shares have declined in the last three months. The shares peaked in mid-December and have lost 35% since then. The falling share price has not deterred Steven Bensinger, on the company’s Board of Directors, from increasing his stake. On March 10, Bensinger purchased two tranches of shares for a total of 3,500 shares, paying $ 607,000. This brings his total stake in the company to more than 30,000 shares, valued at more than $ 5.3 million. Wall Street likes this insurance company, and Casey Alexander, who covers the company for Compass Point, makes a strong bullish case. “We continue to believe that the basic fundamental image remains positive for KNSL. Environmental and social premium growth continues strong (46% YoY) and underwriting is highly profitable, leading to an industry-leading combined ratio … KNSL also claims to have a technology-enabled spending advantage over its pairs which should lead to additional redundancy of reservations. KNSL is making some progress in the insurance space, although it is moving cautiously as this new paradigm unfolds, “said Alexander. Alexander rates the stock as a Buy and sets a target price of $ 225 which indicates room for a 39% increase in the next year. (To see Alexander’s track record, click here) Strong results in a traditional financial sector like insurance will always get the nod from Wall Street, so it’s not surprising to see that the consensus rating of Strong Buy here is unanimous. , based on 3 recent reviews. The stock has an average price target of $ 235, with a potential upside of 45% from the current share price of $ 161.94. (Check out KNSL’s stock analysis on TipRanks) To find good ideas for trading stocks at attractive valuations, visit TipRanks ‘Best Stocks to Buy, a recently launched tool that brings together all of TipRanks’ stock knowledge. Disclaimer: The opinions expressed in this article are solely those of prominent analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.