I like to keep a close eye on which shares have experienced meaningful insider buying.
This is because insider buying is often regarded as a bullish indicator, as few people know a company and its intrinsic value better than its own directors.
A number of shares have reported meaningful insider buying this week. Here are a couple which have caught my eye:
Adairs Ltd (ASX: ADH)
According to a change of director's interest notice, one of this homewares retailer's independent non-executive directors has been buying shares this month. The notice reveals that Independent Non-Executive Director Kiera Grant picked up 106,000 shares through an on-market trade on 15 May. The director paid a total of $150,339.80 for the shares, which equates to an average of $1.42 per share. This purchase lifted Grant's holding to a total of 142,572 shares.
Earlier this month, Adairs revealed that its online sales grew a massive 221% while its stores were closed because of the pandemic. Judging by the investment, it appears as though this director is confident its strong form can continue.
Medibank Private Ltd (ASX: MPL)
A change of director's interest notice reveals that one of this private health insurer's independent non-executive directors has made a sizeable purchase of shares in May. According to the notice, Tracey Batten picked up 15,715 shares through an on-market trade on 14 May. Batten paid an average of $2.85 per share, which is slightly higher than today's price. This works out to be a total consideration of just under $45,000 and lifts the director's holding to a total of 50,000 shares.
This purchase price represents a 22.5% discount to Medibank's 52-week high. Which appears to be a level this director thinks is good value. One broker that might agree is Credit Suisse. Earlier this month it put an outperform rating and $3.00 price target on the company's shares.
