Insider buying, not to be confused with insider trading, is one way to track which stocks executives are buying with their own money. Company insiders - a group that includes corporate officers, board directors, and 10% shareholders - are required to report their stock purchases and sales via a Form 4 filed with the SEC, which can offer valuable information to investors.
That said, not every insider transaction is equally compelling. Executives with large stakes may sell shares on a regular schedule to diversify their holdings, or simply to free up some liquidity. Alternately, share purchases may be carried out using stock option grants, which means insiders are buying at prices that are virtually unavailable to the broader investing public.
With this in mind, here are three stocks insiders were buying with their own money last week - at market prices. These three companies are from diverse industries, covering the technology, collectibles, and retail spaces.
Dick's Sporting Goods
Starting off with the oldest company on this list, Dick's Sporting Goods (DKS) was founded in 1948 and is now based out of Moon Township, PA. It is the largest sports goods retailer in the U.S., with a presence in Canada and Mexico, too. The company currently commands a market cap of $10.02 billion and has a healthy dividend yield of 3.58%.
DKS shares have grossly underperformed the S&P 500 ($SPX), declining 3.1% on a YTD basis compared to the S&P's rise of 16.9% over the same period. The retail stock fell hard last week after the company's results for the second quarter disappointed, and Dick's cut its earnings guidance due to theft concerns.
Board member Sandeep L. Mathrani apparently viewed that sell-off as a buying opportunity. On Aug. 24, the director purchased 1,300 shares of the company at an average price of $113.54 for a total value of about $147,602. Following the transaction, Mathrani's holdings in the company now stand at 9,586 shares.
For the second quarter, Dick's reported 3.6% yearly growth in net sales to $3.2 billion, which came in lower than the consensus estimate of $3.25 billion. Meanwhile, EPS declined sharply, down 23% from the previous year to $2.82 - and failed to surpass the consensus estimate of $3.81 per share.
Overall, analysts are cautiously optimistic about the stock, attributing a “Moderate Buy” rating with a mean target price of $137.29, which indicates upside potential of about 17.8% from current levels. Out of 19 analysts covering the stock, 7 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating, and 11 have a “Hold” rating on the stock.
Grindr
As a dating app that caters to the LGBTQ community, Grindr (GRND) has carved out a niche for itself in the highly popular online dating space. The California-based company was founded in 2009, and currently commands a modest market cap of $943.4 million.
After an explosive SPAC debut late last year, shares of the company are up about 14% in 2023 so far.
Meanwhile, Grindr reported strong numbers for the second quarter as the company moved into the black. Revenues jumped by 32.2% from the prior year to $61.5 million, while operating expenses fell by $1 million and average monthly active users rose 8% to 13.1 million. EPS for the quarter came in at $0.13 per share, reversing a loss of $0.03 per share in the prior year. The company also raised its revenue and adjusted EBITDA margin for FY 2023.
As a result of these strong numbers, shares of the company jumped by more than 8% after earnings.
Perhaps inspired by the stock's strength, board member George Raymond Zage III - chairman and CEO of Tiga, Grindr's SPAC merger partner - bought shares of the company for the first time this year. Zage purchased 100,000 shares last Thursday at an average price of $5.38 for a total value of about $538,000.
Following the completion of the transaction, the director now holds 78 million shares of Grindr, or 45%.
Funko
Founded in 1998, Funko (FNKO) is a toy company based out of Everett, WA, with a market cap of just $334 million. Funko's products include vinyl figures, action toys, plush collectibles, apparel, board games, housewares, NFTs, and accessories.
Shares of Funko are down 39% this year, starkly underperforming the broader equities market. FNKO has been on a downward spiral since its earnings results came out earlier this month, with the stock hitting new lows post-report.
Net sales for the Q2 came in at $240.03 million, down 24% from the prior year and missing analysts' consensus estimates. Adjusted losses per share stood at $0.43, compared to EPS of $0.26 in the prior year. The loss also came in wider than the consensus estimate of $0.38 per share.
However, company insiders seem to think FNKO is a bargain around current levels. From Aug. 17 through Aug. 25, Working Capital Advisors (UK) purchased a total of 751,257 shares for a total value of about $4.2 million, with purchase prices ranging from $5.38 to $6.24.
During this same period, CFO and COO Steve Nave also purchased 55,500 FNKO shares at an average price of $5.45 for a total value of roughly $302,631.
Amid this heavy insider buying - and notable stake-building by Working Capital - Funko stock has recovered by an impressive 24% since it touched a post-earnings low of $5.33 on August 16.
All in all, analysts have a “Hold” rating on the stock, with a mean target price of $8.64 - indicating upside potential of about 30.4% from current levels. Out of 7 analysts covering the stock, 1 has a “Strong Buy” rating, 5 have a “Hold” rating, and 1 has a “Strong Sell” rating.
