Zacks Market Edge Highlights: Vertex, Zillow RH, Super Micro Computer, Yum China

In this article:

For Immediate Release

Chicago, IL – October 7, 2024 – Zacks Market Edge is a podcast hosted weekly by Zacks Stock Strategist Tracey Ryniec. Every week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life. To listen to the podcast, click here:  https://www.zacks.com/stock/news/2346302/insider-trades-how-to-find-the-top-stocks

Insider Trades: How to Find the Top Stocks

Welcome to Episode #419 of the Zacks Market Edge Podcast.

 

  • (1:00) - Learning The In’s And Out’s For Insider Trading

  • (7:30) - How To Read Form F-4: The Importance of Footnotes and Signals To Watch Out For

  • (24:50) - Breaking Down Vertex Pharmaceuticals With Insider Trading

  • (34:40) - What Can We Learn From The Insiders About Zillow?

  • (40:00) - The Breakout Buying From A Director At Super Mirco Computers

  • (48:15) - Understanding Gary Friedman's Purchases At RH: Was He The Big Winner?

  • (52:05) - Breaking Down Yum China’s Insider Cluster Buy’s

  • (59:25) - What Are The Big Takeaways From Insider Buy and Sell Signals?

  • (1:03:00) - Episode Roundup: VRTX, Z, RH, YUMC, SMCI

  • [email protected]

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds, and ETFs and how it impacts your life.

This week, Tracey is joined by entrepreneur and author Asif Suria to discuss his new book, The Event-Driven Edge in Investing. It covers six events that provide investors with opportunities including SPACs, management changes, spinoffs, merger arbitrage, stock buybacks and insider trading.

Tracey has been the editor of Zacks Insider Trader newsletter and portfolio for 13 years. She has seen a lot of insider trades over those years. Asif has a lot of experience as well, as he’s been tracking the insider trades for 14 years.

Answering the Pressing Questions

· Who is an “insider” and how does an insider trade work with the SEC?

· What are the strong signals you should be looking for with insider buying?

· What are the false signals traders should ignore?

There are dozens of insider trades going on every week. How can you distinguish between the top trades and the others?

At Zacks, Tracey uses a combination of the Zacks Rank, other strong company fundamentals, as well as her own experience with insider stock trades to narrow it down for the Insider Trader portfolio.

Here are 5 insider stock buys that stood out to Tracey and Asif over the years.

5 Top Insider Buy Stock Trades: What Made Them Stand Out

1. Vertex Pharmaceuticals Inc. VRTX

In Nov 2020, an independent director at Vertex Pharmaceuticals bought $3.26 million shares in the open market. The director had been on the board for 22 years. His last open market purchase was in 2008. Why was he buying then?

Shares of Vertex Pharmaceuticals are up 125% over the last 5 years. It is outperforming the S&P 500 which is up 85.5% over that same period.

Is director buying like at Vertex Pharmaceuticals one of the strong signals for insider buying?

2. Zillow Group, Inc. Z

In June 2024, Zillow Group director Jay Hoag started buying shares. Jay Hoag is the founding partner of Silicon Valley’s TCV. He is an investing professional who partners with companies. This put up a green flag for Asif, as he recalled Hoag buying years earlier at Netflix, which was a successful trade.

Shares of Zillow Group are up 49% since June 7, 2024, when Hoag first started buying shares.

Do investment professional insider buys, like this one at Zillow, send up a strong signal?

3. RH RH

On June 26, 2024, RH’s CEO and 10% owner, Gary Friedman, bought $10 million in shares. Tracey was familiar with Friedman’s insider buying, as he had bought in 2016 and 2017 as well. Those purchases turned out to be very successful, with shares of RH rising about 950% since those original purchases.

Zacks Insider Trader portfolio bought shares of RH in June, after Friedman purchased. The portfolio has seen a gain of 38%.

Is the CEO buying, like Friedman did at RH, a strong insider buying signal?

4. Super Micro Computer, Inc. SMCI

On Nov 4, 2022, a Super Micro Computer director bought 1000 shares at $76. He didn’t stop there. Shiu Leung Chan bought 8 more times with his last purchase on Feb 1, 2024 with the stock at $568.

Zacks Insider Trader bought on Feb 6, 2024. It sold shares several times, exiting the trade completely on March 11, 2024, with a 60% gain.

Does it send a strong signal if the insider dollar-cost-averages into the stock, like Mr. Chan did at Super Micro Computer?

5. Yum China Holdings, Inc. YUMC

On Aug 13-16, 2024, 5 insiders at Yum China, which operates KFC and Pizza Hut in China, bought shares on the open market. This is what is known as a cluster purchase. The 5 insiders included the GM of KFC, the GM of Pizza Hut, the CEO, the CTO and a Director.

Shares were down nearly 20% on the year when they dove in. On Aug 19, 2024, Zacks Insider Trader portfolio also jumped into the trade. A few weeks later, in Sep 2024, the Chinese government and Central Bank announced various stimulus programs and interest rate cuts meant to boost the Chinese economy.

As a result, shares of Yum China have soared 45.6% over the last month as traders jumped into the China trade.

Does a cluster purchase, like the one at Yum China, send a strong insider signal?

What else do you need to know about insider buying strategies?

Tune into this week’s video podcast to find out.

[In full disclosure, Zacks Insider Trader portfolio currently owns shares of RH and YUMC.]

Why Haven't You Looked at Zacks' Top Stocks?

Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.

Today you can access their live picks without cost or obligation.

See Stocks Free >>

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

[email protected]

https://www.zacks.com/performance

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Vertex Pharmaceuticals Incorporated (VRTX) : Free Stock Analysis Report

Super Micro Computer, Inc. (SMCI) : Free Stock Analysis Report

Zillow Group, Inc. (Z) : Free Stock Analysis Report

RH (RH) : Free Stock Analysis Report

Yum China (YUMC) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

Advertisement