Imitating all insider purchases isn’t as profitable as betting on stocks that have several insiders buying around the same time. Academic studies have shown that insider purchases beat index funds by more than 7 % per year when there are several insiders purchasing. Insider Monkey, your source for free insider trading data, compiled the list of stocks where at least two insiders made recent purchases. Here are the stocks with insiders were buying during the past couple of days:
TranSwitch Corp (TXCC): Insiders have been buying since the middle of February when the shares were trading around $2.30. Today, TXCC closed at $2.61. It returned more than 13% when the broader market experienced a more than 5% decline. Is it too late to buy TranSwitch at these levels? Herbert Chen, a director of the company who paid $2.26 for nearly 24000 shares a month ago, bought 100,000 more shares recently at $2.73. Considering that the stock is off more than 4% since then, investors should look into TXCC more carefully.
Town Sports Intl (CLUB): This was one of our favorite stocks with insider trading about four months ago. We specifically wrote a separate article covering this stock and told our readers that we added it to our hypothetical portfolio. The stock gained around 63% since we wrote that article. We reported more insider purchases on Monday when the stock was trading above $4.90. Today, it closed at $4.61. There were more insider purchases reported yesterday. We still like this stock. Even though this is a micro cap stock, Tom Steyer’s Farallon own more than 4 million shares or around 18% of the company.
Ligand Pharma (LGND): There were several insider purchases after the company announced its earnings mid February. Tom Steyer’s Farallon Capital started a new position in this stock during the fourth quarter. Dan Loeb’s Third Point sold all of their LGND holdings during the fourth quarter. We covered these transactions last week in an article titled “Insider Trading Monitor: 8 Stocks With Substantial Insider Purchases”. Yesterday insiders reported more transactions.
Exar Corp (EXAR): George Soros has been buying EXAR shares for a very long time. In September we reported his large transactions when the stock was trading around $5.60. EXAR underperformed the market since then.
Central European Distribution Corp (CEDC): Polish vodka maker lost half of its market value after missing earnings expectations and cutting its outlook to $1.05 to $1.25 per share earnings in 2011. There were two insider purchases above the $12.50 level. The first purchase was only 2,000 shares by Markus Sieger, who also bought 1,000 shares in 2009 when the stock was $23. The second purchase was much bigger: 20,000 shares by William S. Shanahan. Shanahan bought 10,000 shares last year when the stock was trading slightly below $30.