Every person involved in the stock market will tell you time and time again that being able to outperform the general market is no easy feat. In fact, 80% of fund managers year in and year out underperform the S&P 500 and has people wondering what is a strategy worth using? One strategy that has proven to be effective over time in determining whether a stock is moving higher is insider accumulation due to one simple reason: insiders buy shares, just like us, to make more money. Furthermore, they have an enviable vantage point of the day-to-day operations of the company and/or have a large investment of their own which they like to see increase in value. The following are a few stocks with notable insider purchases and can serve as a nice stating point in your investment research:
Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR) is a biopharmaceutical firm focused on the development of treatments for fatal diseases, including its leading Phase III lipid disorder treatment drug called homozygous familial hypercholesterolemia (“HoFH”). The company’s stock has been absolutely great sitting right near its 52-week high of $28.96 and up approximately 100% year over year. One may think the company is overvalued, but major shareholder Perceptive Advisors thinks otherwise snapping up 50,000 shares on January 18 equating to almost $1.4 million worth of stock. The company operationally has not been doing well missing badly consensus analyst estimates the past four quarters while continuing to burn cash. However, as is the case with most biopharmaceutical firms, the company’s hopes are pinned mainly to a potential blockbuster drug, which in this case is HoFH as described above and investors should only look at this company as a speculative option in my opinion.
TheStreet Inc (NASDAQ:TST) is most likely known for being co-founded by ubiquitous CNBC host and commentator Jim Cramer (“booyah” Jim if you’re reading this) who still remains as one of its largest shareholders. Unfortunately, the stock has seen much better days down over 95% from its all-time “dot com bubble” highs in late 1999. Nonetheless, major shareholder William Martin sees more value ahead buying collectively from January 18-23 140,838 shares on the open market, which is quite significant when we see that the total average daily volume on the stock is approximately 75,000 shares. Looking closer, the company has an impressive net cash position of approximately $1.10 per share with no debt and trading at a reasonable 1x price to sales.