According to a filing with the SEC, between June 11th and 12th Valeant Pharmaceuticals Intl Inc (NYSE:VRX) Board member Lloyd Segal directly purchased 2,800 shares of the stock at an average price of $83.85 per share. This gave him a total of slightly more than 21,000 shares of the stock, and came at the same time as his wife purchased close to 400 shares of Valeant Pharmaceuticals Intl Inc (NYSE:VRX). We track insider purchases because in theory this type of activity increases an insider’s company-specific risk, and so the fact that an insider chooses to buy the stock rather than diversify their wealth should signal confidence in the business. In fact, studies show that stocks bought by insiders slightly outperform the market on average (read our analysis of studies on insider trading) and so we think that it can be useful to do a quick scan of these stocks to see if they look like good values.
The $26 billion market cap pharmaceutical company experienced a 25% increase in sales last quarter compared to the first quarter of 2012, though we’d note that growth was supplemented by acquisitions. Net losses more than doubled from their levels a year ago, and Valeant Pharmaceuticals Intl Inc (NYSE:VRX) reported a loss of 9 cents per share. With one of the company’s largest expenses being its amortization of intangible assets cash flow from operations did see an increase over the course of the year. The stock price has risen over 90% in the last year, despite the fact that Valeant Pharmaceuticals Intl Inc (NYSE:VRX) had also shown a net loss in its 10-K for the full 2012 year. Continuing its acquisitive drive, Valeant Pharmaceuticals Intl Inc (NYSE:VRX) has announced a purchase of Bausch & Lomb which would give it a strong position in eye care related products.
In addition to insider trading activity, we also follow filings from hundreds of hedge funds and other notable investors. We’ve found that quarterly 13Fs can be used to help develop investing strategies (for example, the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year) and of course we can also use them to monitor activity in individual stocks. Billionaire Stephen Mandel’s Lone Pine Capital initiated a position of 4.9 million shares in the first quarter of the year (see Mandel’s stock picks).