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. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

On the Move: The 10 Fastest Growing Businesses in 2015

Fast Money: The 10 Highest Paying Fast Food Restaurants

Mixing It Up: The 14 Best Music Mashups of 2014

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

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!