In a week where we experienced a bifurcated market with the S&P 500 and the Dow Jones Industrial Average both registering a gain of 1% and the Nasdaq and the Russell 2000 index of small cap stocks dropping nearly 2%, insiders stepped up their insider buying. It was surprising to see this spike in insider buying especially so close to the end of the first quarter when most companies are in their earnings related quiet periods. A big part of the insider buying was driving by IPO related buying in three companies and a long-term director of mortgage lender PennyMac Financial Services (PFSI), Farhad Nanji, buying nearly $55 million worth of stock through his investment firm MFN Partners Management. The firm is a Harvard backed investment management company with a value oriented focus and over $2 billion in AUM.
While the 2% drop in the Nasdaq last week and the 0.7% gain year-t0-date may not appear to be much, underneath the surface a lot of tech stocks have dropped sharply, giving back anywhere from 20% to 50% of their gains from their all-time highs.
Incidentally I own four of the names mentioned in that Tweet. Although I took profits in each of them during their meteoric rise upwards, the recent drop has impacted my portfolio. Diversification and a timely hedge helped mute some of the impact from this rotation.
The big winners recently have been retail and small cap stocks that have been rising on growing optimism of a reopening as you can see from the YTD and the six month charts below. The rise of the Russell 2000 over the last six months and the last year has been remarkable. Despite a large run-up from its lows last March, insiders of a retail company top our list of insider purchases this week.
Welcome to edition 561 of Insider Weekends. Insider buying increased last week with insiders purchasing $154.4 million of stock purchased compared to $100.17 million in the week prior. Selling decreased with insiders selling $2.2 billion of stock last week compared to $3.55 billion in the week prior.