Insider Monkey’s Portfolio and Stock Picks

Insider Monkey is a finance blog that focuses on corporate insiders and hedge fund managers. Academic studies support the view that qualified insider transactions and hedge fund purchases manage to beat the index funds. Currently Insider Monkey publishes weekly articles about stocks with insider purchases. We require these stocks to satisfy a mostly public consensus criterion, i.e. several insiders purchasing in a short time frame. So far we’ve published 6 weekly articles about these stocks and we have been tracking their weekly performance. Each article lists that weeks stocks and also evaluates the weekly performance of previous week’s selections. Here are these 6 articles:

Winmark Corporation

6. Five Stocks Insiders Are Buying in 2011 (published on January 9th, 2011): This article listed Winmark Corp (WINA), Trailer Bridge Inc (TRBR), Cogent Communications Group Inc (CCOI), Diamond Foods Inc (DMND), and EQT Corp (EQT). The previous week’s selection returned 4.3% and beat the S&P 500 ETF SPY, which returned 1.1%.

5. One Stock Insiders Are Buying Like Crazy: (published on January 2nd ,2011) In this article we only had one stock satisfying our criterion: Hercules Technology Growth Capital Inc (HTGC). The five stocks selected in the previous week’s article returned an average 0.8% vs. 0.1% for SPY. Three out of five managed to beat the SPY.

4. Five Stocks with Blizzard Like Insider Purchases: (published on December 26th, 2010) We wrote this article right around the blizzard hit in New York City. The article selected the following five stocks: Dell Inc (DELL), Koss Corp (KOSS), Advanced Photonix Inc. (API), Zoltek Companies Inc. (ZOLT), and Tucows Inc (TCX). All of the previous week’s selections managed to beat the market with an average return of 5.5% for the week. SPY returned only 1.2%.

3. Top Insider Purchases Legal and Extremely Profitable: (published on December 17th, 2010) In this article we selected four stocks, all of which outperformed the market during the following week as you just learned in the previous paragraph: Town Sports International Holdings Inc (CLUB), World Heart Corp (WHRT), Bank of America (BAC), and Scientific Games Corp (SGMS). Three out of five stocks selected during the previous week managed to beat the SPY. The average return of these stocks were 1.2% vs. 0.9% for SPY. You may notice that we listed 6 stocks during previous week, but we reported the returns for only 5 of them. The reason is we explicitly stated that we won’t be monkeying RJF insiders. Incidentally, the stock returned 2.5%, performing better than we expected.

2. Six Stocks Insiders Are Buying Like Crazy in December: (published on December 10th, 2010) In this article we selected the following names: Scientific Games Corp (SGMS), Black Hills Corp (BKH), World Heart Corp (WHRT), Town Sports International Holdings Inc (CLUB), Career Education Corp (CECO), and Raymond James Financial Inc (RJF). Six of the seven stocks selected in the previous week’s article beat the SPY. The average return of the selected stocks was 4.3% vs. 1% for the SPY.

1. Seven Stocks Insiders Are Buying Like Crazy: (published on December 3rd, 2010) In this article we selected Bank of America (BAC), Versar Inc. (VSR), Rimage Corp (RIMG), Harris Interactive (HPOL), Jamba Inc (JMBA), Citigroup Inc (C), and Buckeye Technologies Inc (BKI). Since this is the first article of the series, we don’t have a performance report for the previous week’s selections.

There were 22 stocks selected in these articles and 17 of them managed to beat the market during the following week. Last week’s selections are also on their way to beat the market. The cumulative return of these selections was 17.1% in 5 short weeks. The market return was 4.4% in the same time period.

You might be curious about returns for longer holding periods. Until now we haven’t calculated these stocks’ returns over one week simply because it is really time consuming to track these transactions in a neat format. Insider Monkey made an exception this time and prepared the following table that details up-to-date returns for each stock. Only five stocks out of 26 underperformed the SPY. The average return for each week is significantly higher than SPY’s return. Please consult a professional about the interpretation of these results. They might be able to calculate the probability of these happening purely by chance.

Insider Monkey publishes these stocks weekly but wouldn’t consider all of them in a medium term portfolio. We have an additional “hypothetical portfolio” which includes only very few select names. So far we included only two stocks in our hypothetical portfolio.

In this November 14th article titled Insider Trading Report: Town Sports International (CLUB), we explicitly stated that we include CLUB in our hypothetical portfolio. On Friday the November 12th, CLUB closed at $2.97. Its last closing price is $4.52. In two months CLUB returned 52.2%.

In this November 15th article titled Insider Trading Report: AMN Healthcare Services Inc (AHS), we explicitly stated that we include AHS in our hypothetical portfolio. The stock’s previous closing price was $5.27 at the time we penned the article. Its latest closing price is $6.53. In two short months AHS returned 23.7%. During the same time period S&P 500 returned 7.4% including dividends.

The average return of these two stocks is 38%, beating the market by more tha 30 percentage points in two months. We won’t claim that Insider Monkey has a special talent in picking stocks. This is up to your financial advisor to decide. We are just a monkey imitating insiders.

By the way, our weekly articles about insider purchases have been published at various other websites including businessinsider.com, thestreet.com, seekingalpha.com, benzinga.com, and gurufocus.com. So it’s really out of question that we modify our weekly picks after they’re published to commit some sort of deception. These articles are publicly available and anyone is free to validate these results. The returns data is from Yahoo! Finance and calculated returns include dividends and distributions.

It’s still possible that we or our sources made a mistake somewhere along the line. This article or any other article published by Insider Monkey is only for entertainment purposes. Before making any investment decisions, please consult an investment advisor.

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