The stock market can be seen as a great equalizer, a vehicle through which wealth can be generated and preserved by anyone willing to take the risk.
Investors are constantly looking to gain an advantage or an edge on the crowd. However, some individuals might have more resources at their disposal. Insider trading has again made its way into public discourse, and the controversy is continuing to heat up. Bloomberg News called the practice “the exemplar of white-collar transgression,” and went on to add that Americans are correct in their dismay at a “rigged” stock market.
Insider trading itself isn’t illegal, if done in compliance with the SEC. Insiders, or individuals who either have more than 10% equity, hold a senior officer role, or are members of a board, must disclose their trades to the Securities and Exchange Commission, which then makes them public knowledge.
Among the different classifications of insider transactions, one in particular stands out as a Buy signal for anyone watching. Deemed the “Informative Buy,” this is an instance wherein an insider decides to make a purchase of company shares with his or her own capital. These are significant, as they show an assertion of confidence in the company and its future by the insider, and indicate that the stock may gain in price thereafter.
Leveling the playing field is TipRanks, the big financial data aggregator whose business is providing everyday investors with tools that used to be reserved to professionals only. In attempts to time the market, common investors might not be able to place insider trades, but they sure can follow them. With TipRanks, users who have Ultimate accounts have the option to follow thousands of different insiders, receiving notifications any moment a trade is executed and published. Additionally, the site provides Insiders’ Hot Stocks lists as well as the 25 Top Corporate Insiders, and even ranks thousands of insiders across multiple data metrics so users can stay as informed as possible.
If the insiders are benefitting from insider trading, then so could everyone else.
According to TipRanks’ unique Insider pages, the following stocks have recently seen insider trading action.
Like many other tech firms, this massive legacy computer software company has seen an impressive run-up throughout the economic recovery. Shifting with the times, Oracle Corp. (ORCL) has been transitioning its business to enterprise level cloud-computing solutions, and its stock price has reacted generously to the business model.
While the Uninformative Buys and Sells can occur due to myriad reasons, the Informative Buy essentially means the insider sees a bright future for the company, or at least a bright future for his or her own trading account.
For ORCL, several Informative Buys have been executed recently by Jeffrey Henley, the current vice chairman. Over the last 18 days, Henley has purchased nearly $12 million worth in ORCL shares. This kind of activity is a clear signal of confidence from the businessman in the mega-cap software company. The insider is not alone in his convictions, as TipRanks’ Insider Confidence Signal meter reads Positive.
Also asserting his confidence in the stock is Brian White of Monness, who believes that “the successful creation of a solid foundation to support strong cloud growth in the coming years has the potential to increasingly provide the market with more confidence in the company’s long-term business model.” He underlined his prospects for Oracle’s 12-month outlook by assigning a Buy rating and a $115 target price.
Considering that the trend for Oracle is for insiders to buy more stock than they sell, even more upside could be in store for the stock, which is trading almost at its all-time high.
Earlier in 2021, Marathon Digital Holdings (MARA) shifted course toward Bitcoin (BTC) mining, as well as acquisitions of the blockchain-run asset. Since then, the company has traded more or less in-line with the major cryptocurrency, albeit in a more leveraged style.
Along with its halving cycle, Bitcoin has recently seen a run up in price, carrying with it gains for MARA. While the world’s buying pressure pushes up Bitcoin’s value, executives at Marathon are jumping aboard their own train.
By examining Marathon’s Insiders page on TipRanks, users can see that multiple high ranking senior officials have been loading up on stock over the last couple of days. Their collective Informative Buys, worth over $1 million in shares, are a clear sign they believe the firm will see more gains from the ongoing Bitcoin bull run. Judging by Bitcoin’s gains early Monday morning, they were right.
Affirming MARA’s correlation to Bitcoin, Kevin Dede of H.C.Wainwright & Co. stated that “an investment in Marathon Patent is not without a significant level of risk that includes the speculative nature of bitcoin itself as a function of bitcoin pricing and network hash rate.” With this as the case, following insiders’ transactions on the stock is a solid method for confirming confidence in an otherwise volatile category.
Dede stayed bullish on the stock, maintaining a Buy rating and assigning a price target of $50.
Users on TipRanks who follow any of these executives would have received a notification on the trades, providing another signal of confidence for any investor who had yet to pull the trigger on this crypto-related stock.
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Insiders’ Hot Stocks, a newly launched tool which identifies stocks that exhibit Strong Buy indicators, based on insider trading.
Disclosure: At the time of publication, Brock Ladenheim did not have a position in any of the securities mentioned in this article.
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