Why ABIOMED Shares Spiked

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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 ABIOMED (NASDAQ: ABMD  ) , a developer of cardiovascular-based medical devices, rose as much as 10% after an SEC filing disclosed an insider purchase by a director at ABIOMED.

So what: According to the filing, Henri Termeer, a director at ABIOMED, purchased 100,000 shares of stock, or about $1.5 million, at an average price of $14.98. Unlike CEOs and other active managers, directors have close knowledge of a company's potential without being clouded by compensation packages that occasionally misalign a CEO and his shareholders. As such, Termeer's purchase gives investors hope that he thinks ABIOMED shares are undervalued and gives credence to the view that it'll outperform over the long run.

Now what: It's been a really good past week for ABIOMED shareholders, with U.S. regulators dropping their 20-month investigation into the marketing practices of its Impella Recover LP 2.5, and now the disclosure that a director has taken a sizable personal position in the stock. As I said last week, ABIOMED isn't a cheap company, but with the gray clouds beginning to clear, it could have modest room to run higher.

Craving more input? Start by adding ABIOMED to your free and personalized Watchlist so you can keep up on the latest news with the company.

While you can certainly make huge gains in device makers like ABIOMED, the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

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Related Tickers

9/29/2016 4:00 PM
ABMD $128.42 Down -1.47 +0.00%
Abiomed CAPS Rating: ****