Why McDermott International's Shares Jumped

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of engineering company McDermott International (NYSE: MDR  ) jumped 10% today after the CEO made a big bet on the company.

So what: When an insider buys shares of a company on the open market, it's a very bullish sign to investors, and purchases disclosed were a flashing "buy" signal for investors. CEO Stephen Johnson bought 102,368 shares and three other insiders bought a total of 175,000 shares -- huge personal bets on the company.  

Now what: We don't know whether these insiders are thinking that shares are undervalued or they know something we don't, but a bet with their own money is big for investors. Even after the jump, shares are trading at 9 times forward earnings so there's still some value to be had. I think this is very bullish for the long term, and I believe shares can still move higher from here.

Interested in more info on McDermott International? Add it to your Watchlist.

Fool contributor Travis Hoium has no position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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10/27/2016 2:53 PM
MDR $5.42 Down -0.07 -1.19%
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