Shares Of Shaw Group Jump After Large Buys By CEO

HARTFORD, Conn. (AP) — Shares of the Shaw Group jumped Thursday soon after the CEO of the engineering and construction firm bought $6.4 million worth of shares this week.

CEO James M. Bernhard Jr. purchased 160,400 shares Tuesday and 89,600 shares Wednesday, according to a federal regulatory filing.

Analyst Andy Kaplowitz of Barclay's Capital said investors are responding favorably to Bernhard's purchase.

"Usually, when the CEO makes these big purchases, investors take it as a bullish sign that the company is undervalued," he said in an interview.

Kaplowitz said Bernhard is buying at the right time because Shaw's shares have been underperforming the engineering and construction sector for the past few weeks.

In addition, the Baton Rouge, La., company has a significant amount of cash on its balance sheet and some businesses, such as fabrication, are "kind of muted" because of the recession, but will likely improve, he said.

A spokeswoman for the Shaw Group said in an e-mail that all employees are eligible now to purchase stock and Bernhard's stock purchase "speaks for itself."

Shares rose $1.90, or 7 percent, to $27.94 in afternoon trading.