This week, Monsanto's
Why now? And should you follow their example?
The answer to the first one seems clear enough. Grant and Casale must think Monsanto has hit bottom. The stock has fallen 60% from its high in 2008, much farther than the S&P 500 that's off by just 20% over that timeframe.
Part of that fall is due to slipping earnings, which are expected to fall this year for the first time in years. Roundup, the company's cash cow, was hit with massive generic competition that caused sales to collapse.
But the herbicide is only a part of Monsanto's business. Its future growth lies squarely in its biotech seed trait business. The company has been stacking traits on top of one another to create super seeds capable of offering farmers better yields -- at higher costs of course. The company thinks earnings can grow in the mid-teens annually from here thanks to the growth of its seeds.
Clearly Grant and Casale are putting their money where their mouths are. Of course you don't have to follow their lead if you aren't as bullish on Monsanto. You could invest in direct competitors like DuPont
Is Monsanto a worthy investment? Yes, but in moderation, considering the risk in a turnaround candidate. Grant and Casale's buying shouldn't be a reason in and of itself to buy shares. But if you were on the fence about making a purchase, executive insider purchasing should give you a little more added confidence that management is aligned with shareholders.
A tip of the Fool's cap to the Motley Fool Inside Value team for alerting me to the insider buying. The stock has been recommended by the newsletter, and Motley Fool Options has recommended a synthetic long position on Monsanto. Syngenta is a Motley Fool Global Gains selection. Try any of our Foolish newsletters today, free for 30 days.