Carnival plc (ADR) (CUK), AOL, Inc. (AOL) – Tale of the Tape: Insider Buying at Three Large Companies

Embattled oil and natural gas producer

Formerly regarded as a safe haven for income investors, shares of Linn Energy LLC (NASDAQ:LINE) have taken a nose dive in recent weeks as questions have arisen regarding the company’s accounting methods and overall profitability.

Shares began their precipitous drop in early May following a feature Barron’s Magazine article which argued that company fundamentals are deteriorating. Energy production at Linn Energy LLC (NASDAQ:LINE) has stalled in 2013, leading to inadequate cash flow generation in order to meet the $2.90 annual payout for investors.

Oil and gas production fell to 796 million ft³/day during the first quarter, below prior guidance of 827 million ft³/day. The company also restricted itself by stating it reviews cash distributions on an annual basis, rather than a quarterly one. This rigid policy makes a perceived financial shortfall more apparent.

Jacobs failed to catch a falling knife and restore confidence in Linn Energy LLC (NASDAQ:LINE)’s flailing share price, as shares have fallen 15% further since the time of purchase. All in all, investor confidence in Linn Energy LLC (NASDAQ:LINE) appears to be waning.

Foolish takeaway

While there are numerous reasons for corporate executives to sell, insider buying takes place for only one reason: a belief that the share price is going higher.

The board member at Carnival Corporation is hoping to restore confidence following a reduction in full year earnings guidance. Similarly, the Linn Energy LLC (NASDAQ:LINE) purchase comes at a time when fundamentals appear to be deteriorating. Readers interested in speculation may consider Carnival, however I cannot recommend Linn Energy on insider buying alone.

Among the three companies, I believe AOL has the strongest fundamental case for investment. The Internet giant is well-situated to capture market share in display advertising, and insider buying is an added plus.

Thanks for reading, and consider subscribing to my posts for more Foolish ideas on outperforming the market.

John Macris has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. John is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Tale of the Tape: Insider Buying at Three Large Companies originally appeared on Fool.com is written by John Macris.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.