Insiders used the rally in the markets in July to take some money off the table it would seem. The ratio of insider selling compared to insider buying moved to its highest level in 2022. Given the uncertain state of the economy, this isn’t much of a surprise. However, some companies are still seeing insider purchases of their stock. Here are two that have caught my eye.
Let’s start with Stanley Black & Decker Inc. (SWK) , the noted purveyor of power tools and hardware. A director just picked up nearly $1.5 million of new shares, a purchase that followed a dismal second-quarter earnings report that sent the stock down about 20%. Stanley Black & Decker is seeing some of the same supply chain issues that have dinged so many companies and also is dealing with inventory issues, another common occurrence as the economy has slowed dramatically from the levels of last year. Company leadership lowered profit guidance drastically to a range of $5.00 to $6.00 a share from its prior guidance of $9.50 to $10.50 a share.
However, Stanley Black & Decker has launched a substantial cost savings push that aims to take $1 billion annually out of operating costs by the end of fiscal 2023 and is targeting $2 billion in annual savings three years out. The stock also has a dividend yield of 3.3%, which should help put a floor under the shares. With Stanley Black & Decker shares down 50% over the past year and cheap on peak earnings potential, an insider seems to be signaling there might be good long-term value here. It is the first insider purchase of the stock in more than four years.
Then there is Aldeyra Therapeutics (ALDX) , which has been more than $5 million of its shares purchased by a beneficial owner since late June. The CEO also added $60,000 to his holdings. In July, Aldeyra’s dry eye disease candidate Reproxalap met the primary endpoint in a late-stage study. The next steps for Aldeyra are to meet with the Food and Drug Administration and submit a New Drug Application, or NDA, around Reproxalap for this indication.
This compound is also in a pivotal trial to treat allergic conjunctivitis, commonly known as pink eye. Those results should be out next year and it is hoped will lead to a second NDA for the compound. FDA approval would validate Aldeyra’s development platform, and the company has a couple other earlier stage compounds in the pipeline. One of these should disclose Phase 3 results to treat proliferative vitreoretinopathy later this year. Aldeyra has enough cash on hand to fund all operations through 2023 and insiders appear to be signaling they see a big year ahead for the company.