As you likely already know about this Insiders Exposed column, I try to identify profitable situations by researching which insiders have bought the most value of shares in their own companies.
Once I do that, I can dig deeper and attempt to answer the question of why they decided to purchase shares now.
For Albany Molecular Research, you’re going to want to see what I uncovered…
Albany Molecular Research, Inc. (AMRI), a contract research and manufacturing company, provides integrated drug discovery, development, and manufacturing services primarily in the United States, Europe, and Asia.
This biotechnology company resides within the healthcare sector.
Just days ago, the president and CEO of AMRI purchased 30,000 shares of his own company’s stock at $17.01 per share, totaling a value of more than half a million dollars.
Right away, numbers like that catch my eye every time. And when I notice this kind of insider activity for a biotech company, I become even more intrigued because I know the big-gain potential of biotech stock.
That’s when I started digging…
The first thing I noticed was how AMRI has fantastic annual gross income numbers that reflect strong, consistent growth. However, the quarterly numbers were up and down, suggesting that long-term growth would be more difficult.
Then I noticed the chart of AMRI, which you can see now from Stockcharts.com:
This is a very interesting chart; just when AMRI was truly starting to pick up a head of steam and put together a strong climb, it suddenly fell about the $23 level to near the $16.50 level…in 1 day!
And then the CEO bought shares just days later at the ‘discount’ price of $17.01.
That’s not normal behavior, so I decided to look into AMRI further…
That’s when I found very recent reports that AMRI is now being investigated after claims from investors, focusing on the company’s operations and financial performance, concerning possible federal securities law violations.
Without boring you with the details, the disconnect is a result of AMRI’s low results report that now is leaving the company saying they expect a full-year earnings well below the consensus estimate.
There is very little doubt that those reports of an investigation were the cause of the severe drop in the price of AMRI shares, but that brings up the question of why the CEO would buy shares now.
Perhaps he wants to show shareholders how confident he is, whether he really is or not. Or maybe he has inside knowledge that the investigation will be quick and easy, or will not even get past the formalities.
Or maybe this CEO knows that the upcoming performance/news of AMRI will be so good that it will drive the price of shares up anyway.
Either way, this CEO isn’t being scared off, and that means we need to keep tracking AMRI until we know if it will take off or fall into a rut.
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