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[Trade study] Rapid Gains With Cluster Buys

Dustin Pass  |  October 11, 2021

Sometimes, the best trades look terrifying at first.

Case in point:

Back in early 2020, oil in particular and the market at large were both getting CRUSHED for obvious reasons…

Yet, the Insider Report team found a MASSIVE insider cluster buy on an oil and natural gas exploration firm called Matador Resources (MTDR).

Some background:

By March 2020, this stock had bottomed out as low as $1.72/share…

Down from almost $20/share just 2ish months prior.

MTDR Stock Chart

MTDR Stock Chart

But as the price descended through March 2020, we saw multiple insiders consistently buying shares for anywhere between $2-$10/share over several weeks.

Chart of insider's buys and sells

Chart of insider's buys and sells

Some of these buyers included:

  • Chairman
  • CEO
  • CFO
  • Executive Vice President
  • President
  • Chief Operations Officer
  • Several company directors

And what do you know…

The stock turned around in April and started climbing again. 

Within 3 weeks of our initial buy, the stock alone was up 52.3%!

MTDR Stock Chart

MTDR Stock Chart

We sold half our position to book some profits. During the crazy year that was 2020, we didn’t want to risk those early gains in case of more global bad news.

And after all, we’re not insiders. We don’t know what could come next that impacts the stock.

But speaking of insiders, none of them sold a single share that day.

The very next day, the stock jumped to $9/share, where we sold another quarter of our position for even more profits.

Overall, following these insiders led us to 150% stock gains and 245% call options gains in under a month.

Still, none of them have sold since then. Some have even bought more.

Chart of insider's buys and sells

Chart of insider's buys and sells

By constantly monitoring names like this, we can "buy right, sit tight" on names that continue to run.

Sure, oil was soft through the summer, and MTDR pulled back to $25ish.

We could have sold by now in case it continued to drop since our position was up such a large amount from when we first bought.

But still, no insiders sold. And so, we didn’t sell either.

Now look at oil prices.

And look at MTDR’S price: hovering around $43 — bringing another 72% gain from that $25 mark.

The lesson here: by following insiders, it’s much easier to get in at the best possible price and let your money go to work for you.

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Dustin Pass
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