CD&R Investment Associates IX, a major owner of Beacon Roofing Supply (BECN), recently added 116,945 shares to their holdings. The buy increased the fund’s stake by over 0.8 percent, and came to a total purchase price of $6 million.
This marks the first insider buys since August, when the company CEO and CFO bought shares, with the CFO buying nearly $100,000 in shares and the company CEO nearly $245,000. Going farther back, insiders were more likely to be sellers.
Company insiders own just 0.6 percent of company shares, but institutions like CD&R have nearly locked up the float. That could lead to a move higher, if owners of shares are unwilling to sell to potential buyers at current prices.
Action to take: Shares of the roofing materials supply firm are up 60 percent over the past year, handily beating the S&P 500. The company looks attractive at 11 times forward earnings, although shareholders won’t be rewarded for their patience with a dividend.
With shares starting to trend higher again in the past few weeks, traders could use a call option to leverage that move higher. The April 2022 $55 calls, last carrying a bid/ask spread around $2.75, could offer a high double-digit return by expiration if shares head back to their 52-week high.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.