What Insiders Are Still Buying in a Frothy Market
While few and far between right now, these names have recently seen significant insider purchases.
You've reached your free article limit
You've read 0 of 1 free Pro articles.
We are closing in on the end of the first quarter of 2024. The year has opened on a high note for investors with both the Nasdaq and S&P 500 tracking to deliver returns of just under 10% for the quarter as the rally that started in late October has continued to play out.
The best adjective to describe the current market is "frothy." The S&P 500 trades at roughly 21 times the $250 per share in profits that Bank of America expects from the index in 2024. This estimate was recently bumped up from $235 a share, largely due to the huge demand generated from the AI revolution.
Long-time and well-known strategist Sam Stovall of CFRA noted this week that the S&P 500 was trading at a 33% premium to its valuation over the past two decades. And keep in mind, a large chunk of those comparisons come from an era that spent most of those 20 years with zero or ultra-low interest rates as a discounting feature. In other words, a TINA (There is not alternative) investing environment.
Corporate insiders appear to be confirming there are few bargains in the market, as the insider selling to buying ratio has jumped to its highest level in three years. So, what are insiders still buying?
Here are a few names still seeing significant insider buying, which is few and far between right now.
Let’s start with OmniAb, Inc. (OABI), where the company’s CEO purchased nearly $1.2 million worth of shares last week.
OmniAb operates several discovery platforms that uncover monospecific, bispecific, and poly-specific human therapeutic antibodies, which it then licenses to scores of partners. The company then receives a variety of upfront access fees; clinical and regulatory milestones; and royalties.
Antibodies are a big business and used by the biotech, biopharma and agriculture industries, among others. All told, it is more than a $200 billion global market. OmniAb has hundreds of license antibodies in pre-clinical stage with three approved products and roughly two dozen in clinical development. OmniAb's business model is very similar to AbCellera Biologics Inc. ABCL, which I also have a small piece of as part of my holdings in this niche of the market.
Analyst firms have taken a shine to OmniAb recently. Six firms, including RBC Capital and Stifel Nicolaus, have reissued "Buy" ratings on OABI so far in March.
Moving on to telecommunications infrastructure provider Globalstar, Inc. GSAT, one director has purchased over $4.5 million of shares so far in March. Interestingly, three other company directors have sold just under $1.3 million worth of equity collectively so far in March.
Globalstar’s network is extensively used by customers for tracking purposes such as to track rail cars & trailers, monitor utility meters and marine assets. The company has roughly 800,000 subscribers.
The company has significant excess capacity in the 5G sweet spot on its network and a deal inked with Apple AAPL last spring has helped nudge the company to near break-even status. A primary potential asset at Globalstar is a huge amount of excess spectrum. At least one director seems to be betting the company will eventually be able to monetize this profitably.
At the time of publication, Jensen was long ABCL and OABI.
