The hot insider buys in December have at least two things in common: five insiders purchasing shares and other catalysts to increase their share prices. In some cases, much higher, which plays into the assumption that insiders only buy for one reason, and that is when they think their shares will increase in value. After all, there’s no reason for an exec to throw good money after bad if the company is in trouble and they already have skin in the game.
PureCycle Technologies: overcoming production hurdles
PureCycle Technologies (NYSE: PCT) is an emerging green tech with a production method for recycling polypropylene plastic. The system produces clean feedstock comparable to new material and is in the early production and ramping phases. Some production hurdles have hampered the outlook, allowing the short sellers to pile onto the market and drive the stock price to its post-IPO low. However, insiders used the low as an entry point and weren’t the only ones buying.
Insiders own about 11.5% of the stock and grow their holdings while the institutions do the same. Institutional interest is high for this micro-cap speculation, about 63%, and there have been noticeable spikes in their activity this year, including one in the first 2 months of Q4. While hurdles remain, the company is expected to see a sizeable revenue and cash flow ramp that could easily underestimate the business. Regardless, it won’t take much good news to spark a short squeeze with short interest exceeding 60%.
First Busey is a high-yield with heavy insider buying
First Busey (NASDAQ: BUSE) is the holding company for Busey Bank, operating out of Illinois. Its five insiders have been buying heavily over the last few quarters and have their holdings up to near 7.5%. Institutions are also buying this stock and owning about 55%, largely due to the dividend. The dividend is about 4%, with shares trading near $23.25 or about 10X earnings. Analysts also like the stock; they’ve issued positive revisions to their research in Q4 2023, driving the market higher. The consensus target is only 5% above the current action but rising due to the recent analysts' activity, and the high-end of the range suggests another 10% to 15% on top of that.
Deeply oversold CommScope gets an upgrade
CommScope (NASDAQ: COMM) manufactures and markets a wide range of communications equipment and services. The company struggles with growth in 2023, helping to depress the stock to its post-IPO lows, creating a profoundly oversold condition in the market. Insiders are taking advantage of the low, adding to their positions, which amount to about 2.66% of the stock. Institutions also buy and own nearly 90% of the market, showing a deep commitment to the business.
Among the catalysts for this stock is a recent upgrade from Raymond James. Analysts at the firm upgraded to Market Perform, citing an improved risk-to-reward ratio. Headwinds remain, but inventory normalization is expected in early 2024, leading the company back to growth. Raymond James did not issue a price target with the upgrade, but the analysts' range suggests the stock is trading near its floor and has a triple-digit upside ahead.
Darling Ingredients is an apple in the eye of Goldman Sachs
Darling Ingredients (NYSE: DAR) insiders own about 2.6% of the company, the institutions about 89%, and both groups buy on balance. Trading at 10X earnings is a value among staples companies, and Goldman Sachs noted that. Goldman Sachs named the company on its list of Buy-Rated laggards with significant upside relative to their consensus targets.
This stock is rated a Moderate Buy by the analysts’ community, is a Top Rated Stock on the platform and trades well below the low end of the expected range. The $46 handle it carries today is 40% below the low end of the analysts' range and 80% below the consensus, with growth expected to return in 2024.
