Best Buy (BBY) Insiders Knew Something You Didn’t

The majority of investors this past August were certain the economy was going to plunge into another recession. Best Buy shares specifically were hammered, trading around $32. Three BBY insiders weren’t having any of this. The first insider made his purchase at $32.76 on August 19th. Another insider bought at $31.89 at the beginning of September. The third insider pulled the trigger at the end of September at $39.76.

Best Buy Co., Inc. (NYSE:BBY)

Academic studies have shown that stocks intensively bought by insiders beat the market by more than 7% per year. Insider Monkey, your source for free insider trading data, defines “intensive trading” as three insider purchases within three months. As a result, our criterion sent a “buy” signal at the end of September. Today Best Buy shares trade at $44.81, with the two month return at 12.7%. The S&P 500 index returned 5.2% including dividends in that time. Best Buy beat the S&P 500 by 7.5% in two months, so in this case one need not have waited a year for the excess returns.

There are no guarantees that every intensively bought stock will outperform the market. Historically however, they returned more than the market on the average. This is mainly because either insiders utilize some material nonpublic information in their decisions (this is illegal but it’s very difficult to prosecute) or they’re simply better analysts than are the 20-something MBA graduates covering these companies in their ivory towers on Wall Street. Insider signals generated this way lead to higher returns than analysts’ buy and sell recommendations.

The first insider who bought BBY shares on August 19th returned 37% in about three months. He did this by trading a large cap company that had a lot of analyst coverage. The conventional wisdom that well covered large caps being efficiently priced proved to be meaningless here.

Related Articles:
How to Legally Profit From Illegal Insider Trading
The Insider Trading Anomaly: Make 7% More Than Index Funds

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Top 10 Most Expensive Luxury Cars in the World – 2014

Killer Small Business Ideas

The 50 Best Personal Finance Blogs

Most Expensive Apartments in New York City

Bloodiest UFC Fights Ever Fought

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!