When analyzing insider activity, one principle stands out: follow the insiders who step up to buy during a selloff. Company executives and directors typically know more about their business than outside investors, and when they purchase shares in weakness, it often suggests the market has overreacted. A recent example comes from Advanced Flower Capital (NASDAQ: AFCG), a specialty lender in the cannabis industry, where significant insider buying has caught investors' attention.
In the past few days, an AFCG director, along with the company's president and chief investment officer, purchased $1.6 million worth of shares in the $4.04 to $4.17 range. These moves came directly after disappointing earnings reports triggered a selloff in the stock. Their actions send a strong message: this cannabis stock looks undervalued.
AFCG currently trades at nearly half its reported book value of $8.18 per share, underscoring the disconnect between market sentiment and underlying value. Insider confidence, backed by this valuation gap, suggests a potential opportunity for investors willing to ride out volatility in the cannabis finance sector.
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