Tankers, Takedowns & Air Taxis: Insiders Are Buying These 3 Names

Key Points

• Insiders are spending millions on shares across three interesting and highly different parts of the market.
• Toyota Motor is more than a 10% shareholder in one of these names and recently finalized another investment.
• According to Wall Street, one oil tanker stock with big-time upside just saw its owner add tens of thousands of shares.

Insiders are making big-time purchases in three companies they work for, own, or have close business relationships with. A quote from famed investor Peter Lynch provides insight into why insider buying is a signal investors should pay attention to. Lynch said, "Insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise." This shows that insider selling isn't always a bad sign, but that insider buying is a clear positive sign.

Under Lynch’s leadership, Fidelity’s Magellan Fund achieved an average annual return of more than 29% from 1977 to 1990. This massively exceeded the return of the S&P 500 Index over that period, cementing Lynch’s place as a legendary investor.

However, it is important to note that just because insiders think that a stock's price will rise, they can still be wrong. Nevertheless, insider buying is a notable positive signal to add to the equation when evaluating stocks.

CEO and Son Buy 200,000 Shares of High-Yield Tanker Stock

First up is Nordic American Tankers NYSE: NAT. Recently, the company’s Chief Executive Officer (CEO), Herbjorn Hansson, and its Vice President, Alexander Hansson, the CEO’s son, each bought 100,000 shares of the company. Overall, the Hansson family now owns 9.6 million shares of NAT, making them the company’s largest private shareholder. The Hansson family purchased the shares at between $2.76 and $2.78, indicating that they see value in the stock at these prices. It appears that Wall Street analysts may agree.

The two most recent updates come from B. Riley and Jefferies. They place $5 and $3 price targets on the stock, respectively. Taking the average of these two figures would imply around 45% upside in shares versus their June 6 closing price. However, Jefferies’ lower target is much more recent. Nordic also often has a very high dividend yield. Over the last five years, the company’s trailing 12-month yield is 8.6%. Still, this number can fluctuate very substantially, as the company frequently changes its dividend.

Toyota’s JOBY Purchase Helps Shares Take Flight

Next up is electric vertical take-off and landing (eVTOL) aircraft stock Joby Aviation NYSE: JOBY. Recently, automaker Toyota Motor NYSE: TM announced it had purchased approximately 49.7 million shares of Joby. This is equal to $250 million, as the company purchased these shares at a price of $5.03. Notably, the news release caused shares of Joby to skyrocket nearly 29% in one day. Although Toyota is obviously not a Joby employee, this is still considered an insider transaction as Toyota owned more than 10% of Joby’s stock. Markets have known for some time that Toyota would invest this money; it simply has now finalized the purchase. The company will invest an additional $250 million at some point.

Toyota is also not simply an investor in Joby; it is also a design and manufacturing partner as Joby develops its next-generation vehicles. This tempers the positive signal typically associated with insider purchases. Unlike passive investors, Toyota’s broader business is somewhat tied to Joby’s operational success. Toyota is a supplier of powertrains and other components to Joby. Toyota hopes that Joby’s success can lead to more demand for the parts it supplies. Joby’s failure would undermine this bet Toyota is making on eVTOL and the growth prospects it expects from the partnership.

Insiders Buy TKO Hand Over Fist; Analysts Slap on Price Target Upgrades

Last up is TKO Group NYSE: TKO. TKO is the owner and operator of the Ultimate Fighting Championship (UFC) and World Wrestling Entertainment (WWE). According to MarketBeat data, insider buying over the last 12 months comes in at $641 million. This eclipses insider selling of $17.6 million by over 36 times.

In June, major shareholder Silver Lake West Voteco LLC purchased nearly 1.6 million shares of TKO. The transaction had a total value of $250 million, massively outpacing the $1.5 million of insider selling in the quarter. Despite TKO’s share price more than doubling since the beginning of 2024 as of the June 6 close, analysts continue to upgrade the stock. MarketBeat tracked updates since the company’s May 8 earnings release place an average target on the stock of just under $188. This implies upside in shares of 13% versus their June 6 closing price.

As Peter Lynch says, insider buying indicates that these stakeholders see an upward trajectory for these stocks. Although these insiders could be wrong, these purchases remain an important bullish signal to consider when evaluating these names.