We track insider purchases and sales in our database of insider trading filings. While insider sales often aren’t necessarily bearish signals, since it makes sense for insiders to diversify their investments away from the company which employs them, a purchase should signify that the insider believes particularly strongly that the stock will do well. Of course, insiders aren’t always correct but studies do show that stocks bought by insiders outperform broader market indices (read our analysis of studies on insider trading). Investors can therefore treat insider purchases similarly to a stock screen and do more research on any companies which seem like good values. Here are five stocks that insiders have bought recently:
A Board member at Apache Corporation (NYSE:APA) bought 10,000 shares on March 26th at an average price of $74.48 per share. Earlier in March another Apache Corporation (NYSE:APA) insider had been buying the stock; these consensus insider purchases, according to studies, are particularly bullish signals. In the fourth quarter of 2012 Apache Corporation (NYSE:APA) experienced a significant decrease in earnings versus a year earlier. Wall Street analysts are expecting net income to improve considerably over the next couple years: the current market capitalization of $29 billion represents a trailing P/E of 15 but is only 7 times forward earnings estimates.
Kohl's Corporation (NYSE:KSS) was another stock seeing insider buying as a Board member directly purchased 2,500 shares of stock for $45.38 per share. The department store’s same store sales growth was essentially flat in 2012 compared to 2011, and earnings dropped 16%. As a result while the earnings multiples are low- specifically, Kohl's Corporation (NYSE:KSS) trades at 11 times trailing earnings- we would hesitate to consider it a good value and think that investors should look at its peers instead. Anthony Bozza’s Lakewood Capital Management, a hedge fund with about $1 billion in AUM, owned 770,000 shares at the end of December (find Lakewood's favorite stocks).