Wall Street investing legend Peter Lynch once noted, “insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.”
We’re not talking about shares they get from stocks. These are people reaching into their own pocket and buying company stock on the market like us. Recently, an insider at Agree Realty (ADC) dug deep into his wallet and bought $2 million worth of the real estate investment trust (REIT).
At the time, ADC stock was trading at one of its lowest points since January and his purchase was perfectly timed: ADC has jumped 10% in the week since to an all-time high of $77.98 per share and the REIT announced an increase in its monthly dividend payment. Does this insider know something more is coming?
John Rakota is a director at Agree Realty and previously served as U.S. ambassador to the United Arab Emirates during President Trump’s first term. He already owns a sizable amount of ADC stock, some 507.8 million shares worth over $40 million. He has a knack for buying at opportune times, such as a $1.1 million purchase last May at around $59 a share, a tranche that’s gained 33%. So why might ADC stock be a buy now?
While Fed chairman Jerome Powell hasn’t indicated interest rate cuts are coming, they may be on the horizon. That would benefit ADC, which relies on debt to acquire properties and boost profitability. Agree, though, has no debt maturing until 2028, mitigating immediate refinancing risks, allowing it to capitalize on cheaper capital for expansion.
Agree’s triple-net leases, where tenants cover taxes, insurance, and maintenance, further shield it from rising operational costs, ensuring stable cash flows.
Because ADC’s tenants are consumer defensive in nature – Walmart (WMT) is its biggest tenant – it should thrive in any economic turmoil.
With a dividend currently yielding 3.9% annually, it’s understandable why Rakota thought ADC was attractive. At current prices, Agree Realty is still a buy.
