Key Points
- Insiders have been buying these three stocks recently.
- The volume and the number of buys are unusually high.
- The management of these companies likely see more upside ahead.
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People don’t like to throw money into a sinking ship, and by that logic, insider buys in Wall Street can be an easy way to gauge how well a company might do in the coming quarters. An “insider buy” is the legal purchase of a company’s stock by its own executives, directors, or major shareholders.
These buys are considered legal if they areproperly disclosed to the Securities and Exchange Commission. The public can freely view these insider trades. Research shows that insider purchase patterns are often good signals for buying and selling, with stocks that have insider buying outperforming the overall market by 6% to 10.2% per year.
As such, it pays to look into stocks with a high number of insider buys. Here are three such stocks:
Scholar Rock Holding (SRRK)
Loading stock data...Scholar Rock (NASDAQ:SRRK)is a clinical-stage biopharmaceutical company for diseases where protein growth factors play a central role. It does not yet have commercial products. It generates revenue primarily through collaboration and licensing agreements with larger pharmaceutical partners.
The company’s Director Srinivas Akkaraju made three buys of the stock in early October, all filed this Tuesday. His first buy was worth $14.44 million, followed by two more worth $697.71k and $3.67 million, respectively. He is a non-employee director but has deep biotech credentials.
This is a very strong vote of confidence, as previous insider trades have been planned and pre-announced sales from other officers and directors.
The likely rationale comes from Phase 3 SAPPHIRE data showing apitegromab improved motor milestones in a statistically significant way. Approval is possible in both Europe and the U.S. next year.
This could push the stock up even higher.
CarMax (KMX)
Loading stock data...CarMax (NYSE:KMX)is America’s largest used-car retailer.
It operates CarMax Sales Operations and CarMax Auto Finance (CAF). The company also wholesales trade-ins via on-site auctions, sells extended-service plans, and performs reconditioning and repair work.
KMX stock has been in a rather sorry state since 2021. It went through a significant decline from late 2021 to late 2022 that more than halved KMX’s value. It was on a sustained recovery from then to early 2025.
This year, it has again entered into a second phase of selloffs, with the stock down 45% year-to-date.
Insiders are betting against the trend. Director Oneil Mark F bought $499.81k worth of shares on the 2nd of October. The same day, Director Steenrod Mitchell D bought $91.14k worth of shares.
Earlier this year, CarMax withdrew its long-term unit-growth algorithm, “citing a lack of clarity,” which the Street read as “we don’t know how low this cycle goes.”
But these insider buys show that management sees light at the end of the tunnel
Inventories have come down from $3.94 billion at the start of the year to $3.15 billion in the most recent quarter. Plus, the Federal Reserve’s rate cut in September and two more planned rate cuts this year can give the company a surprisingly fast snap-back in 2026-27.
If you can tolerate 6 to 12 months of choppy numbers, the risk is worth the eventual payoff.
Sportsman’s Warehouse (SPWH)
Loading stock data...Sportsman’s Warehouse Holdings (NASDAQ:SPWH)is a specialty retailer focused on outdoor recreation gear. The company operates a chain of stores across the United States offering a one-stop shopping experience for hunting, fishing, camping, and shooting enthusiasts.
There has been a flurry of insider buying activity in the past week. Director Mcbee Richard D bought $61.75k of the stock on October 2, along with CEO Stone Paul buying $20.42k of the stock. The next day, Paul bought $167.94k more, with Director Tucci Michael D joining in by buying $140.5k worth of SPWH.
The insiders seem to be betting that the worst of the margin squeeze and liquidity scare is behind SPWH, the new merchandising strategy is taking hold, and the shares discount an outcome far worse than they now expect.
The stock seems to have bottomed and is up 219% from its trough. It is a penny stock, so multibagger returns are possible if management can keep executing.
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