Another Reason to Follow the Insiders

Follow the insiders

Last week, my insider scanners signaled an unusual purchase by a Chief Financial Officer (CFO). I like to follow the insiders because it’s like picking up money in the corner. And trust me, even with my bad back, there’s nothing like picking up money in the corner. The company executive, Michael Hawkins, had purchased $600,000 in company stock or 100,000 shares on July 16. It was a 40% increase to his existing position in company shares.

The ticker is OBTX. I’d never heard of that ticker. The name on the screener showed Obitx Inc. (OTC:OBTX). Once again, I was stumped. Was it a biotech company, as I assumed? Did I stumble on some arbitrary small-cap stock with very low volume trading? No. I stumbled upon one of the top-performing stocks of the last 11 days.

Follow the Insiders

There’s a good reason to follow CFO buying of more than $100,000. In this situation, Hawkins was using his cash to purchase his company’s stock. But the company’s name isn’t Obitx. It’s “Everything Blockchain.” Now, I don’t like “Blockchain.” It confuses me. Imagine that I am but a simple caveman looking to the sky and seeing an airplane for the first time. That was what my first time learning about Blockchain in 2017 felt like.

Everything Blockchain operates in the cryptocurrency space with a focus on Ethereum blockchain technologies. I can’t say that I’d heard of them. But it didn’t matter. The CFO was putting his money where his mouth was ahead of the company’s earnings report and as Bitcoin prices collapsed under $30,000. 

Blockchain stocks tend to bounce back and forth depending on the value of the world’s largest cryptocurrency. In the case of Everything Blockchain, it will also follow the value of Ethereum, the second-largest cryptocurrency project in the world. 

Hawkins made an exceptional move by purchasing the stock at the time. Given that he is the CFO, he likely could calculate the real value of the stock based on any moves in outside influences like the price of Bitcoin or other currencies. Since making the purchase, OBTX stock is up 90.8%. That’s right, a 90.8% jump in 11 days. Follow the insiders. I repeat that.

Momentum Steps 

This morning, S&P 500 momentum is slightly positive for the first time in a week. However, broader market momentum remains locked in deeply negative conditions. We continue to watch the state of the broader market. 

Momentum has been negative since July 2. Keep in mind that more than 7,500 stocks are trading publicly. And remember that about 58.5% of public stocks are currently trading under their 50-day moving average. 

It’s essential to take a step back and be conservative with any stocks that you buy today. Remember that Apple will be reporting after the bell today. Given that Apple comprises a significant weight on the S&P 500 and the Nasdaq 100, any bad news could sink the broader market. 

I’ll be back tomorrow to talk about Apple earnings and what they mean for the market looking ahead. It’ll be one of the most important things you’ll read all week.

Garrett Baldwin
Garrett Baldwin
Garrett Baldwin joined Godesburg Financial Publishing as Chief U.S. Markets Analyst in early 2021. A Johns Hopkins-trained Economist, he’s worked with hedge funds, venture capital firms, angel investors, and economic advisors to the U.S. government. Baldwin specializes in market anomalies and alternative investments. He’s written extensively on momentum, value, insider buying, and other unique strategies that provide investors that elusive edge.
Garrett Baldwin
Garrett Baldwin
Garrett Baldwin joined Godesburg Financial Publishing as Chief U.S. Markets Analyst in early 2021. A Johns Hopkins-trained Economist, he’s worked with hedge funds, venture capital firms, angel investors, and economic advisors to the U.S. government. Baldwin specializes in market anomalies and alternative investments. He’s written extensively on momentum, value, insider buying, and other unique strategies that provide investors that elusive edge.

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