We like to track insider purchasing activity because studies show that stocks bought by insiders tend to beat the market (read more about studies on insider trading), and this makes sense as insiders should prefer diversification to buying more of their company’s stock unless they are quite confident that the stock is going to rise. While it’s certainly good to see one insider purchase, we’re particularly interested in consensus insider purchases. Stocks bought by multiple insiders are somewhat more reliable market-beaters (though not a sure thing), so they are particularly worth our attention. See more about the average performance of stocks bought by multiple insiders. Here are five stocks that at least one insider has bought in the last month, and at least three insiders have bought in the last three months:
Five different insiders have bought shares of Visteon Corporation (NYSE:VC), which is a $2.9 billion market cap auto parts manufacturer which primarily provides climate and electrical components to the car companies. Poor conditions in the auto market drove revenue and earnings down sharply in the third quarter of 2012 compared to the same period in 2011, but analysts think that the company will bounce back and so the forward P/E is a somewhat reasonable 15. Billionaire Steve Cohen’s SAC Capital Advisors increased its holdings of Visteon in the third quarter of 2012 to a total of 2.6 million shares (check out Cohen’s stock picks).
There has been consensus insider buying at Weatherford International Ltd (NYSE:WFT), a provider of equipment and services for oil and gas companies. Revenue has been up, but lower margins caused net income to be 42% lower in the third quarter than in Q3 2011; the stock price has declined 27% in the last year as the markets have watched this unfold. The sell-side sees a recovery here as well, with a forward P/E of 11 and a five-year PEG ratio of only 0.5. Third Point, managed by billionaire Dan Loeb, owned 4 million shares at the end of September and this was essentially unchanged from three months earlier (find Loeb’s favorite stocks).
Petroleum products storage and transportation company NuStar Energy L.P. (NYSE:NS) is another target of purchases by multiple company insiders. Historically the stock has paid a high dividend yield, so it may be of interest to income investors, though they should make sure to do their due diligence as the stock price has declined 20% in the last year. The company does have a good record of increasing or maintaining its dividend payments, but in terms of its valuation the stock trades at 22 times consensus earnings for 2013.
See another high yield stock insiders love: