3 cheap stocks bought by insiders in the first quarter

Insiders are buying PHX Minerals Inc. (NYSE: PHX), Herbalife Ltd. (NYSE: HLF) and Quantum-Si Incorporated (NASDAQ:QSI) because they are cheap and should provide value over time. Cheap is relative; in this case, we have shares trading between $1.80 and $10 and near long-term lows. This allows investors to buy them when they are cheap relative to historical parameters and accumulate enough shares to take advantage of the options. In all cases, insiders are buying, institutional support is present, analysts see a silver lining and there are catalysts in the outlook: meaning there are more reasons than just their convenience to buy them.

PHX Minerals is a high-yield small-cap energy play

A solid small-cap dividend payer, PHX Minerals is a Texas-based oil and gas company that has been in business for approximately 100 years. Like its larger competitors, the company cut distributions during the pandemic, but has since resumed its cycle of increasing distribution. The payout is worth around 3.5%, with the shares trading near long-term lows, and is cheap at 8.75% of earnings. The payout is reliable at current levels and represents only 30% of expected 2024 earnings. Earnings are expected to grow significantly in 2025, so another substantial increase in distribution is expected.

PHX has three insiders buying shares, including the CFO, a director and a major shareholder, bringing total holdings to around 4.7%. The first quarter purchases are noteworthy because they are the first internal purchases in nearly two years, except for a single sale by a major shareholder in the last quarter. That shareholder is Edenbrook Capital, LLC, which is still the largest shareholder. Institutions also buy into the balance sheet and own about 38% of the company.

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Analysts rate this stock a Buy and consider it undervalued. The lower target tracked by Insidertrades.com is more than 25% above the current price movement and the consensus implies another 2500 basis points of upside. PHX is a low-volume stock, so investors should expect amplified volatility.

Renewed life in Herbalife?

Herbalife is still struggling, but the company has had enough time for its business to normalize and the market to follow suit. Today, the company is profitable, and growth and margin expansion are expected to persist through 2025. The latest forecasts were solid but insufficient to support the market.

However, post-release action shows the market trading at a possible low and analysts see a floor for price action. The lower target is just below the current stock and, according to consensus, there is potential for a 25% upside.

Four insiders bought these shares in the first quarter, the first insider activity since the third quarter of 2023. Insiders include two directors, the CEO and an executive vice president; the total of privileged shareholdings is equal to approximately 1%. As interesting as the internal activity is, the institutional hold is more significant. Institutions have been selling, but activity slowed markedly at the start of the year and holdings remain large, accounting for about 75% of the stock. Recent purchases include Goldman Sachs Group, which increased its position by more than 150% to 1.3% of the company.

Quantum-Si enters the revenue phase

Quantum-Si Incorporated is a small life sciences company developing a single-molecule detection platform to advance next-generation protein sequencing. The company’s product is a small-scale protein sequencer that can be used on a desktop at a fraction of the cost of larger models. It launched on a limited basis and is expected to see wider availability this year. There are rumors that revenue is expected to skyrocket.

Insidertrades.com didn’t track any insider activity for nearly a year until the first quarter of 2024, when buying picked up. Insiders now own around 30% of the company and could buy more, given the low share price and sale prospects. Institutions also buy this stock and hold about 40%. Analysts see it as an undervalued buy, trading 12% below the low end of their range and 50% below consensus. The next earnings report will be released in early May and is expected to be positive, with growth accelerating from the previous quarter.

Companies in this article:

Agency	Current price	Price change	Dividend yield	P/E ratio	Consensus assessment	Consensus price target
Quantum Si (QSI)	$1.84	+2.2%	N/A	-2.71	Jack	$2.67
Herbalife (HLF)	$8.13	-2.6%	14.76%	5.73	Reduce	$10.50
PHX Minerals (PHX)	$3.41	Dish	3.52%	8.74	Acquire	$5.20