Insider purchases are worth tracking because on average- though not always- stocks bought by insiders outperform the market. Read about academic studies on insider trading. This can be helpful in a couple different ways. When researching a stock, for example, investors can consider insider activity as one of the many factors that go into an investment decision. Another way to use insider activity is to take a quick look at stocks that have recently been bought by insiders- essentially, a screen- and see if any are worthy of further research. Here are five stocks that insiders have bought recently:
The COO of amusement park company Cedar Fair, L.P. (NYSE:FUN) bought 3,000 shares of the stock on December 21st at an average price of $32.31 per share. In the crucial third quarter of the year (it seems that about half of Cedar Fair’s revenue is earned between July and September), revenue and earnings were down compared to the same period in 2011; however, earnings per share was actually considerably higher in the first nine months of 2012 thanks to better results in the first half of the year. The dividend yield is about 5% and it might be a target for income investors who don’t like the high valuation at Six Flags.
Multiple insiders have been buying stock at Weatherford International Ltd (NYSE:WFT), an $8.2 billion market cap oil and gas equipment and services company. Consensus insider buying is a particularly bullish signal. Revenue was up 13% last quarter versus a year earlier, mostly on strong international business, though operating income and earnings were actually down as lower margins offset growth on the top line. With a beta of 2.2, Weatherford is very sensitive to movements in the broader market. The forward P/E is 10 and that is low enough, combined with the insider buying, to be worth taking a closer look at.