Scott Slater, CEO at Cadiz (CDZI), recently bought 14,000 shares. The buy increased his stake by 13 percent, and came to a total cost of $49,000.
He was joined by two directors. One also bought 14,000 shares, increasing her stake by 25 percent. The other bought 100,000 shares, laying out $350,000 to increase her stake by 927 percent. The only insider sale over the past two years came from an institution.
Overall, Cadiz insiders own 39.8 percent of shares.
The water services utility company is up about 60 percent so far this year. Cadiz remains unprofitable, operating at a moderate loss. And revenues dropped 9 percent last year.
Even worse for prospective investors, Cadiz raised capital earlier this year by issuing more shares, with funding going towards repaying the company’s credit facility and to develop water supply and storage products.
Action to take: Shares could trend higher from here, but another share sale could dilute existing shareholders in the short-term. Water projects are likely to be profitable for long-term investors, so it might make sense to buy a partial stake now and potentially more on a drop in shares.
For traders, the November $5 calls, last going for about $0.55, could see mid-double-digit returns if shares continue to trend higher in the coming months before expiration.
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.