Insider Buying is on the Rise With These 5 Multi-State Operators Leading the Way
Insider buying, not to be confused with insider trading, occurs when an officer, executive or director of a publically traded company purchases shares of the company in the market or privately and is almost always seen as extremely bullish. Insiders have a unique perspective of their own companies and will often time buy additional shares when they feel the stock is undervalued. Many insider buys occur during poor market conditions and can help set a bottom before an eventual reversal in price action takes place.
The cannabis sector has seen its fair share of setbacks recently. Initially, the industry was rattled by the CannTrust Health Canada scandal followed by a slew of weaker than expected earnings reports and most recently the vape crisis. To make matters worse, the already battered market saw The Green Organic Dutchman (TSX: TGOD) (OTCQX: TGODF) announce to the world it was having trouble securing the necessary funding to complete its two Canadian facilities. The TGOD news spooked the market forcing investors to question the companies in their portfolios and their ability to raise capital moving forward.
If all of the above didn’t put enough pressure on the market, HEXO (TSX: HEXO) (NYSE-A: HEXO) was the icing on the cake after it announced late last week it was lowering its Q4 net revenue guidance and withdrawing its fiscal 2020 guidance altogether. The HEXO news sent shares plummeting to near 2018 lows as cannabis investors raced to the sidelines.
With the dust still settling from last week’s panic sell-off, Aphria (TSX: APHA) (NYSE: APHA) arrived just in the nick of time and this morning released another surprise profitable quarterly earnings report which crushed analysts expectations. Aphria has now posted profitable earnings in back to back quarters showing investors that profitability in the cannabis sector is a reality and last quarter’s results weren’t a fluke. Shares of APHA soared over 15% today and brought the majority of the sector along for the ride. Aphria’s U.S. NYSE listed shares soared over 25% today as American investors bought all they could of the Canadian licensed producer (LP).
With many cannabis stocks now trading near their two-year lows, a buying opportunity like the one in front of us now may never come again. We took the time to dig through some SEDI filings to see if cannabis industry insiders echoed our analysis and sure enough we uncovered some significant insider buying that took place over the past month.
As previously mentioned, large scale insider buying often takes place when stocks have been beaten down to undervalued levels. In this case, it was overall market conditions that caused the decline leaving most of the fundamentals largely untouched. Share prices have become so attractive that insiders are left with little choice but to add to their positions at these low levels.
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Insider buying like the five U.S. multi-state operator (MSO) trades listed below signal a vote of confidence to the market and usually we see the crowd follow suit.
Without further delay, here are the top five insider buys from the past month.
Curaleaf Holdings (CSE: CURA) (OTCQX: CURLF)
- Insider: Boris Jordan, Executive Chairman of the Board
- Date: September 30, 2019
- Shares Purchased: 100,000
- Average Price: $8.21
- Amount Paid: $821,260
- View Transaction: Subordinate Voting Shares – Acquisition or disposition under a prospectus exemption
MedMen (CSE: MMEN) (OTCQX: MMNFF)
- Insider: Chris Ganan, Chief Strategy Officer
- Date: October 2, 2019
- Shares Purchased: 265,592
- Average Price: $2.63
- Amount Paid: $697,416.36
- View Transaction: Class B Subordinate Voting Shares – Acquisition or disposition in the public market
Acreage Holdings (CSE: ACRG.U) (OTCQX: ACRGF)
- Insider: Kevin Murphy, Chairman and CEO
- Date: October 9, 2019
- Shares Purchased: 100,000
- Average Price: $6.75
- Amount Paid: $674,810
- View Transaction: Subordinate Voting Shares – Acquisition or disposition in the public market
Trulieve (CSE: TRUL) (OTCQX: TCNNF)
- Insider: Kim Rivers, Chairman and CEO
- Date: September 26, 2019
- Shares Purchased: 31,000
- Average Price: $8.15
- Amount Paid: $252,625.30
- View Transaction: Subordinate Voting Shares – Acquisition or disposition in the public market
Cresco Labs (CSE: CL) (OTCQX: CRLBF)
- Insider: John Walter, Board Member and Director
- Date: October 4, 2019
- Shares Purchased: 16,200
- Average Price: $6.20
- Amount Paid: $100,501.56
- View Transaction: Subordinate Voting Shares – Acquisition or disposition in the public market
How to Search for Insider Trades
The System for Electronic Disclosure by Insiders (SEDI) is Canada’s on-line service for the filing and viewing of insider reports as required by various provincial securities rules and regulations.
Alternatively, you can use CEO.ca’s Insider Tool to search for trades on any Canadian listed stock. I prefer the CEO.ca platform as I find it much easier to navigate. Another great option for Canadian stocks is the website Canadian Insider.
In the United States, the Electronic Data Gathering, Analysis and Retrieval (EDGAR) is the electronic filing system created by the Securities and Exchange Commission (SEC). The system is used by all publicly traded companies when submitting required documents to the SEC which include insider trading reports.
Site’s like GuruFocus.com provide a simpler more streamlined option for searching insider activity in U.S. equities. Novice investors may find the SEC’s EDGAR overwhelming and real-time platforms like Guru Focus are much more convenient and user-friendly.
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