David MacLennan, a director at
Caterpillar (CAT), recently bought 400 shares. The buy increased his holdings by 12 percent, and came to a total cost of $99,716.
The director was the last buyer of Caterpillar shares back in May. Otherwise, company insiders have been sellers of shares, mostly from the exercise of stock options. The sales have included both directors and executives.
Overall, company insiders own 0.15 percent of shares.
The farm machinery company is up 28 percent in the past year, as revenues jumped 20 percent. Higher agricultural commodity and food prices kept demand strong for Caterpillar’s products.
Even with the strong performance, shares trade at about 15 times forward earnings. That’s a moderate discount to the overall market, and makes shares look like a bargain given the company’s brand power in the farm equipment space.
Action to take: Investors may like shares for the long run at current or lower prices. Caterpillar shares offer a 2 percent dividend yield, and the company has worked to consistently grow it over time.
For traders, shares have pulled back slightly over the past few weeks before this latest insider buy. A potential rebound could be about to start. The June $260 calls, last going for about $6.40, offer mid-double-digit returns in the months ahead.
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.