Academic studies have shown that insider trading is most profitable when several insiders buy around the same time. A study by Lakonishok and Lee shows that insider purchases generate more than 7 % per year in excess returns above index funds when there are several insiders purchasing. Insider Monkey, your source for free insider trading data, compiled the list of companies with at least 3 insiders buying with the latest purchase made in November. Here are the 5 stocks insiders are certain will outperform the market over the next 6 months:
1. AMN Health Services Inc (AHS): The stock is down less than 1% since the last insider purchase on November 10th. AHS is already outperforming the S&P 500 index, which is down nearly 4% since then.
2. Town Sports International (CLUB): CLUB is down more than 4% since the last insider purchase on November 10th. If you had bought this stock last Friday after the last insider purchase was announced, you wouldn’t have lost anything during the past week.
3. RTI Biologics, Inc. (RTIX): RTIX is almost flat since the last insider purchase on Tuesday. If you had bought it at the beginning of September after the previous insider purchase, you could have made 16% in a little more than 2 months.
4. Live Nation Entertainment Inc (LYV): Barry Diller sold 2.5 million shares of LYV to John Malone’s Liberty Media Corp two weeks ago. The sale price was $9.62. Diller invested proceeds of this huge sale in Coca-Cola (KO) by buying 270,000 shares at $62.59. At the beginning of this year Liberty offered to buy 34.2 million shares of LYV at $12 but the tender offer was rejected in March. The price John Malone paid to Diller was a steal compared to the $14 price in March. On Monday Liberty Media bought an additional 4.5 million shares of Live Nation Entertainment at $10.18.
5. Career Education Corp. (CECO): CECO is up 10% since the last insider purchase was made on Friday. If you had bought CECO on Tuesday morning after the insider purchase was announced, you could have made more than 5% in two days. Career Education Corp. has been in the crosshairs of some short-selling hedge funds, as are other education stocks.