Insiders Have Been Snapping Up These Stocks

Why would an insider ever buy additional shares of their company’s stock? Why not diversify their exposure to the market by instead investing in other businesses? Our answer to this line of thinking is that generally, insiders will avoid buying, and in fact will often sell shares for this perfectly understandable reason. However, when they do buy it may be because they are extremely confident in the company’s prospects. On average, stocks bought by insiders do outperform the market (read more about studies on insider trading) and we think this is why. Luckily, thanks to disclosures, investors can find stocks bought by insiders and use it as a list of suggestions to review further. Here are five stocks that insiders have bought recently:

GREENLIGHT CAPITAL

Thomas Schoewe, a Board member at General Motors Company (NYSE:GM), bought about 3,800 shares on November 6th at an average price of $25.95 per share. GM is one of billionaire David Einhorn’s favorite stocks, with the manager of Greenlight Capital naming it as one of his two long picks at last month’s Value Investing Congress. On a quantitative basis GM looks attractively priced at 9 times trailing earnings and 6 times consensus estimates for 2013, but that actually isn’t much cheaper than other auto manufacturers and auto-related companies. In addition, insiders have been buying GM fairly consistently since the IPO two years ago with little to show for it in most cases.

Apache Corporation (NYSE:APA)’s Vice President of Investor Relations, Brady Parish Jr., recently bought 4,800 shares at an average price of $80.96. Apache is an oil and gas exploration and production company which has significant growth opportunities from shale plays in the U.S. The sell-side is more bullish than investors, and so the stock trades at a forward P/E of only 8. Many other energy companies are also trading at value levels, and Apache’s bottom line performed poorly in the third quarter versus a year ago, so it might not be the best pick for its industry even though it could prove undervalued. Learn more about Apache.

$1.1 billion market cap business intelligence software company MicroStrategy Incorporated (NASDAQ:MSTR) saw Board member Carl Rickertsen buy 3,000 shares at an average price of $96.51. The stock is priced for growth at 51 times trailing earnings, but has been struggling recently with its top and bottom lines about flat last quarter compared to the third quarter of 2011. As a result we don’t think that we would be buyers of this stock either.

Chairman of the Board at Travelzoo Inc. (NASDAQ:TZOO) Holger Bartel bought 200,000 shares of the stock on November 2nd at an average price of $18.39 per share. Travelzoo is a $280 million market cap deal site providing discounted travel and entertainment products (its daily dollar volume is over $2 million). Travelzoo’s revenue was down 8% in the third quarter from a year ago, which contributed to a 42% drop in earnings. Investors have soured on deal sites and so the earnings multiples- yes, the company is actually profitable- are in the teens. However, with 31% of the shares held short there’s clearly widespread bearishness in the market.

Also at a fairly low market capitalization but also posting sufficient liquidity for most investors is Audience Inc (NASDAQ:ADNC), whose VP of Engineering Asher Medina bought over 12,600 shares earlier this month at $7.58 per share. Audience is a semiconductor company whose products are used to process video and audio signals. The stock is down 63% from its May IPO after the company announced in September that it may no longer be a supplier for future Apple products. As a result, its good historical numbers aren’t as relevant as the fairly low earnings projections for 2013. Investors should probably avoid it.

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

10 Top Reasons For Getting Fired

The 3 Best States to Start an LLC

10 Jobs That Allow You to Travel

7 High-Paying Jobs You Can Do From Home

12 Best Cities to Shop in USA

10 Best States To Practice Medicine

The 10 Best States to Have a Business

The 12 Most Expensive Apple (AAPL) Apps in the Market

The 10 Richest Billionaires in the World

10 Biggest Kickstarter Failures

The 10 Best Places to Work At

The Top 10 of Google Inc (GOOGL)’s Most Expensive Acquisitions

13 Best Cities to Visit in South America

10 Most Expensive Works of Art of All Time

The 10 Richest Banks in the World

The 10 Best-Paying Jobs in America (2014)

7 Most Expensive Foods in the World

The World’s Top 10 Earning Authors

Five Wicked and Very Expensive Items (and Other “Stuff”) Sold on eBay

10 Biggest Celebrity Bankruptcies

The Top 10 Highest Paid CEOs in 2014

The 10 Most Expensive Real Estate Cities in America

10 Most Expensive States To Live In America

The 10 Best Airlines in the World

The 10 Best-Selling Cars in 2014

The 10 Best Industries to Invest In

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

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!