Insider Buying Trends Signal Opportunities in Key Large-Cap Stocks
In the first quarter, insiders invested in large-cap companies like Texas Pacific Land (NYSE: TPL), TKO Group (NYSE: TKO), and Keurig Dr Pepper (NASDAQ: KDP). This activity raises questions for investors in the second quarter: are these stocks still worth buying? The answer is not universally affirmative.
Texas Pacific Land: A Strong Dividend Despite Market Conditions
Texas Pacific Land focuses on the Permian basin while remaining distinct from the oil sector. Its primary business is land and resource management, which includes granting easements for roads, power lines, pipelines, and offering water and other resource-based services. With two insiders making extensive purchases—33 transactions combined—Texas Pacific Land became the most purchased stock by insiders in Q1.
Notably, Director Murray Stahl and Horizon Kinetics Asset Management led these acquisitions. Horizon Kinetics, managed by Stahl, is the largest stakeholder, holding about 16% of the float and managing mutual and exchange-traded funds.
Texas Pacific Land presents several appealing characteristics, such as a high-margin, royalty-based business model, a debt-free balance sheet, strong cash flow, and reliable capital returns. Despite its high price multiple, the stock’s valuation is justified by consistent dividend distributions and a positive growth outlook.
The company has consistently increased dividends over the past two decades, with the current payout representing only 23% of the earnings forecast, suggesting continued growth potential. However, dividend sizes may fluctuate quarterly. One analyst rates this stock as a Buy, but notes it may trade roughly 25% above fair value by Q2 2025. Additionally, large institutions like BlackRock and Vanguard hold about 60% of its shares and have been net buyers this year.
TKO Group: Positive Momentum From Insiders and Analysts
The TKO Group is experiencing strong positive momentum, fueled by robust insider buying, significant institutional investments, and favorable analyst sentiment. In Q1, insiders, including the CEO and several board members, purchased more than $300 million worth of stock, making it the top-buy by dollar value during this period. Their total holdings, combined with major shareholders, now approach 55% of the company’s equity.
Institutional investment surged to a multi-year high, with nearly 90% ownership of the stock. Few shares remain for retail trading, effectively leaving the stock tightly held. Analysts are optimistic, rating TKO Group as a Buy with target prices indicating a potential 10% upside by mid-April, and adjustments suggest even higher projections by year-end.
As for TKO Group itself, it encompasses the entertainment empires of WWE and UFC, with growth anticipated in 2025. The company benefits from minimal direct tariff exposure and currently pays a dividend yielding around 1.0%.
Keurig Dr Pepper: Balancing Headwinds and Tailwinds
Keurig Dr Pepper faces various tariff challenges, particularly concerning aluminum and coffee. Nonetheless, it is well-positioned within its market and catching the attention of analysts, who have underscored its appeal to Gen Z and younger consumers, alongside the overall strength of the beverage industry. Analysts have rated KDP stock as a Moderate Buy, projecting a 10% advance. Institutional ownership exceeds 90%, with buying activity hitting a multi-year high in Q1.
In terms of insider activity, KDP was the top stock for Q1 based on the number of shares purchased. One significant insider transaction occurred when major shareholder Bevco bought shares in late January, only to sell them shortly after for a 10% profit. Other insider data reveals a trend of sales from directors and C-suite executives, suggesting cautious sentiment.
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The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
