(This is an excerpt from an article I originally published on Seeking Alpha. Click here to read the entire piece.)
I usually interpret insider buying by company executives as an extremely positive development. However, I am unsure what to think of CEO Mark Smith’s recent purchase of shares of Molycorp (MCP) stock (hat tip to David White for noticing the transaction). Rare earth element (REE) company MCP has experienced a lot of insider selling as IPO shares have exited lock-up periods. Mark Smith has been one of the sellers, releasing 259,260 shares at a total value of $13.1M in 2011.
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Smith’s purchase is not only just 2% of the value of the shares he recently sold in 2011, but also the purchase price is almost 20% above his earlier sales. This combination makes his purchase both unimpressive and borderline bizarre. At best, these purchases seem to be an attempt to attract attention to the stock’s relatively low price (and valuation). Regardless, I cannot treat it as a major fresh bullish signal.
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*Chart created using TeleChart
Be careful out there!
Full disclosure: long MCP