Insiders Making Moves: Chesapeake Energy Corporation (CHK), ADT Corp (ADT) & More

Page 1 of 2

Our database shows that insiders have recently going crazy about stocks ranging from natural gas producer Chesapeake Energy Corporation (NYSE:CHK) to security systems company ADT Corp (NYSE:ADT). According to economic theory, it is rational for investors to diversify their wealth; one implication of this theory is that company insiders should avoid buying stock and therefore increasing their company-specific risk. An exception to this rule would occur if the insider is particularly confident in the stock’s prospects, so insider purchases should be more likely to occur under that condition; in fact, studies generally show a small outperformance effect for insider purchases (read our analysis of studies on insider trading). Therefore we think that it can be a good idea to track what insiders are up to and see if any of their buys make for good stock picks. Read on for our quick take on five stocks insiders have bought recently.

An insider bought 8,000 shares of Chesapeake Energy Corporation (NYSE:CHK) between August 5th and 6th. After struggling with liquidity issues and a poor natural gas market last year, the exploration and production company has sold off some of its assets and Wall Street analysts expect enough improvement on the bottom line next year that the forward P/E is 12. Chesapeake Energy Corporation (NYSE:CHK) may be depending on higher natural gas prices for that to happen, however, and 12% of the float is held short as many market players are bearish.

In addition to insider purchases, we also track quarterly 13F filings from hundreds of hedge funds and other notable investors. We’ve found that the information in 13Fs can be useful in developing investment strategies; for example, the most popular small cap stocks among hedge funds generate an average excess return of 18 percentage points per year (learn more about our small cap strategy). Our own portfolio based on this strategy outperformed the S&P 500 by 33 percentage points since inception 11 months ago. We can also track interest in individual stocks through this database, and can see that billionaire Carl Icahn (who had bought a stake in Chesapeake Energy Corporation (NYSE:CHK) last year) owned almost 60 million shares at the end of March (see Icahn’s stock picks).

As we’d mentioned, ADT Corp (NYSE:ADT) has also been a target of recent insider purchases. The company was spun out in order to be a pure-play home and business security and monitoring company; many investors like to invest in spinout situations on the theory that management becomes more able to focus on operations without having to consider the needs of the parent company. Read more about investing in spinouts. The stock started off strong after becoming publicly traded last October but has since declined to the point that it has underperformed the S&P 500. ADT Corp (NYSE:ADT) is valued at 20 times forward earnings estimates.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!