Business

Why do insiders buy these 2 stocks?


When the market closes today, the cash portion of my portfolio will be in excess of 40% due to countless expiring guaranteed call positions in the money. That means I’ll have to do a lot of research in the coming weeks and months to find new opportunities for all this “ammunition.” A good point that I always start with in this search is to look at what insiders are buying. Today, we look at some of the names on that list.

Let’s start with Zymeworks (ZYME) . This cancer-focused growing concern has several compounds in its system. The most important of these is a dual-specific antibody candidate called Zanidatamab. Zymeworks is pursuing the use of Zanidatamab to target a variety of HER2-expressing cancers in combination with other drugs and also as a monotherapy.

I just opened an initial share of this small cap this week through covered call positions regardless of what a healthy short term percentage in the stock is. Beneficial owners of the stock have added more than $17 million worth of equity to their stake in the company through 2023, which is a great vote of confidence for the company’s prospects.

Additionally, the company announced encouraging interim results from a study called HERIZON-BTC-01 in December. This trial is evaluating Zanidatamab as a monotherapy for the treatment of amplified BTC. second-line HER2 (bile duct cancer). Zymeworks has a partnership agreement with Jazz Pharmaceuticals (MUSIC MUSIC) .

If Jazz chooses to continue this partnership after final results from this test are available in the second half of this year, which seems likely, it would trigger a $325 million payout for Zymeworks. The company will also be able to earn substantial/regulatory payments as well as royalties. Zymeworks has a large cash position and a market capitalization of approximately $600 million.

Then there’s the EOG Resource (EOG) is on my research list for this weekend. The Houston-based large-cap oil and natural gas producer looks solid at first glance. Revenue will grow just over 40% in fiscal 2022 when the company reports fourth-quarter results early next month. The company receives about half of its revenue from crude oil and the rest from natural gas and natural gas liquids. Sales growth will slow significantly in fiscal year 2023 due to lower energy prices.

However, the stock costs 9 times earnings and has a 2.5% dividend yield. Stocks are down just over 10% from their recent highs in late November. This prompted a company director to buy more than $2.6 million worth of stock a week ago.

Notably, this is the first insider stock purchase since November 2021, right before the strong rally of this stock. Options are very liquid on this name and I will likely bet this on a new covered call holding that will start next week after I delve a little deeper. A little bit about this investment thesis over the weekend.

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