What happened
Medical device maker Insulet's (PODD 1.23%) stock was the cure for the investor blues on Wednesday. Following news of a large insider buy, the shares subsequently shot more than 6% higher on the day. That was well higher than the sub-0.4% increase of the S&P 500 index.
So what
The inside buyer of Insulet stock was none other than its CEO, James Hollingshead. In a regulatory filing, the specialty healthcare company divulged that Hollingshead had purchased 5,550 shares of its common stock on Monday.
While that doesn't look at first blush to be a big-time purchase, Insulet stock currently has a triple-digit price tag. As a result, that buy-in cost the company's leader just over $1 million.
CEOs of major companies are, of course, well remunerated for the most part. While many can afford $1 million-plus buys of their own company's shares, that's still a very high number. It's not likely Hollingshead is making the move simply for morale purposes. And while the stock has been somewhat of an underperformer lately, it's not like its price has been plummeting toward a bottom.
Now what
That's why investors reacted to the news so positively. A CEO's grand gesture of confidence in their own stock is always heartening. This isn't, of course, the sole reason investors should also buy into a company. Fundamentals always matter.
Regarding those, Insulet has generally been doing well these past few years. The company's revenue has grown, at times steeply, and it's usually (although thinly, at times) been profitable. Meanwhile, there are many opportunities for growth in the devices segment, considering the U.S. population as a whole is rapidly aging and, therefore, starting to require more medical care.
