Insiders Now Seeing Red With DO At New 52-Week Low

In trading on Thursday, shares of Diamond Offshore Drilling, Inc. (DO) touched a new 52-week low of $44.12/share. That's a $29.07 share price drop, or -39.72% decline from the 52-week high of $73.19 set back on 05/21/2013. Large percentage drops always require that the stock post even larger percentage gains from the low in order to recover the old price point, and for DO that means the stock would have to gain 65.89% to get back to the 52-week high. For a move like that, Diamond Offshore Drilling, Inc. would need fundamental strength at the business level.

Here's a rhetorical question: Who knows more about fundamentals at the business level than the company's own insiders? So let's take a look to see whether any company insiders were taking the other side of the trade as DO shares were being sold down to this new 52-week low, focusing on the most recent trailing six month period. As summarized by the table below, DO has seen 2 different instances of insiders buying over the past six months.

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Purchased Insider Title Shares Price/Share Value
12/13/2013 Paul G. Gaffney Director 1,000 $56.18 $56,176.50
02/14/2014 Edward Grebow Director 3,000 $46.52 $139,560.00

In the short run, while the new 52-week low suggests the stock is at the cheapest price and perhaps therefore the best bargain it has been over the last 52 weeks, the low print also means anyone who has purchased the stock over that timeframe is staring at an unrealized loss. Oftentimes, that factor drives a stock's technical analysis metrics by creating overhead resistance, with investors who bought higher now anxious to reverse their trade once they are back to breakeven. The chart below shows where DO has traded over the past year, with the 50-day and 200-day moving averages included.

Diamond Offshore Drilling, Inc. Moving Averages Chart

Time will tell whether the insider purchases foretell a future rebound for DO shares, which are presently showing a last trade of $44.16/share, slightly above the new 52-week low.

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