Tracking insider information is one of the most well-established ways to profit from the stock market. A number of empirical studies have shown that non-routine insider activity beats the broader market by about 7 percent. Additionally, insider activity can give you some level of guidance on a stock that does not have wide analyst coverage. I picked some stocks below that recently saw insider purchasing activity to see how they are faring.
Carl Icahn’s $10 billion hedge fund Icahn Capital has been buying up a great deal of Navistar (NYSE:NAV) shares lately. As of March 31, Icahn owned 7.25 million shares of the company. He added to this on July 23 and 24, purchasing about 688,000 shares, which, along with purchases in June, bring Icahn’s total ownership to 9.96 million shares, or 14.5 percent ownership. A manufacturer of heavy trucks and diesel engines, Navistar has seen a year-over-year market cap decrease, having lost more than 50 percent of its value. The company saw wonderful earnings last year at $5 per share, but the first half of 2012 saw losses of over $4 per share. Icahn may try to wrestle control of the company and merge it with another of his investments, Oshkosh Corporation (NYSE:OSK).
Five years ago, Kevin Douglas swore off initiating a stake greater than a 20 percent in IMAX (NYSE:IMAX). Now, with 10 months left on his commitment, Mr. Douglas presently has a 13.2 percent stake in the company. IMAX is seemingly seeing a resurgence from its heyday in the 1990s. In 2010 and 2011, IMAX outfitted a total of 65 different standard movie theaters with the IMAX Digital 3D screen system. This totals over 700 individual theaters installed. IMAX DMR allows the company to transform regular release movies into IMAX screenable movies.
IMAX is making a niche for itself, and I think it is favorably valued in respect to its historical figures. The Street’s sales estimates for 2012 come in at $302 million, up from $241 in 2011 (which was a sluggish year). Sales are expected to increase in 2013, and significant expansion of the IMAX digital technology will help sales volume.
Harold Simmons, Chairman of the Board at Valhi (NYSE:VHI), has been purchasing shares in the company avidly over the past year. Valhi owns three different segments that include component products, waste management, and chemicals. The company’s 3:1 split earlier this year increased overall trading liquidity for the company. First quarter results were very positive for the company, reporting earnings of $0.78 per share, up from $0.33 per share in the first quarter 2011. Sales were up 34 percent year-over-year. This is a continuation of last year’s improved performance; operating income increased in 2011 to $543 million from $194 million in 2010.
CEO and Chairman of Opko Health (NYSE:OPK) Phillip Frost has been steadily purchasing Opko stock in the past year and owns 38 percent of the $1.3 billion company (This is a sizable portion even of Frost’s net worth of slightly over $2 billion). As of March 31, the company had $62 million in cash, something that is important to see in any pharmaceutical or medical diagnostics company. The company is actively developing diagnostics for lung cancer, Alzheimer’s disease, and neuromyelitis optica, among many others. As with any biotech, cyclical performance and developmental releases have a heavy impact on pricing. However, Frost has a clear vision, which is obvious from a June 2012 company presentation detailing emerging worldwide markets for a variety of products and Opko’s strategic stake in other biotech companies.