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Insider Weekends: Cluster Insider Purchase At Align Technology

  • November 6, 2022

One of the things I have really enjoyed over the last few weeks is reviewing insider purchases every night for our daily Event Driven Monitor series of posts. These nightly reviews surface small companies and small purchases that would otherwise be lost in the weekly aggregate data. For example, three of the top five purchases in our last Insider Weekends article were from regional banks. This week, the regional banks are missing from the list but that is primarily because the size of the purchases were smaller and not because the insiders were not buying.

The purchases this week brought up an interesting group of companies including some we have written about several times in the past. It was interesting to see that the CEO of new spinoff Biohaven (BHVN) continued buying stock as increasingly higher prices. I decided to close our position in the company and wrote the following in the October 2022 Mid-Month Update article,

Most pharma deals tend to close in relatively short periods and the Pfizer’s acquisition of Biohaven was no exception. The deal, which was announced in May 10, 2022 closed 146 days later on October 3, 2022. We discussed the deal in our May 2022 Mid-Month update when the stock was trading at $141, providing upside of $7.50 per share on the $148.50 per share all cash deal.

For every two old Biohaven shares you owned, you received one share of the new Biohaven (BHVN). The new Biohaven closed trading at $10.88 on Friday, enhancing returns for arbitrageurs from $7.50 a share to $12.94 per share, a return of 9.2% in less than five months. While I like the fact that a Director purchased shares before the close and the CEO purchased shares of the new Biohaven post-close, I have no idea how to value the pipeline of a pre-revenue biotech company and generally stay away from them. I will be selling my Biohaven spinoff shares in the coming days.

We also saw a cluster of purchases by the insiders at Align Technology (ALGN), the company that makes the clear dental aligners called Invisalign that are nearly ubiquitous at most dentist offices. We wrote about insider buying by the company’s CEO Joseph Hogan after he purchased $2 million worth of stock and wrote the following  in May of this year,

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