The Cheesecake Factory Incorporated (CAKE), LogMeIn Inc (LOGM) – Reading the Tea Leaves: Conviction with Large Insider Buying

Chairman and CEO Michael Simon recently stepped in and took advantage of the market sell-off. Mr. Simon purchased 19,900 shares of LogMeIn on the open market when the stock was trading for $17.74 per share. The total transaction value amounted to $353,000 when shares were bought on Feb. 27.

Simon has been in at the helm since he co-founded the company back in 2003. Despite the recent painful sell-off, Wall Street believes that LogMeIn may see a rebound in the second half of 2013. The recent insider buying by Simon supports this belief in my opinion.

In other news, online file storage tool Dropbox is rumored to be planning an IPO during the latter part of 2013. Analysts estimate the size of the IPO to be around $4 billion.

Murphy Oil Corporation (NYSE:MUR)

This oil and gas E&P company came to the forefront last October when activist investor Daniel Loeb disclosed he had purchased a significant stake. In a letter to the company’s board of directors, Loeb outlined a four-point plan that he advocated would increase the value of Murphy Oil’s business and therefore the stock price.

On Oct. 4, Murphy Oil filed a press release on its website in response to Dan Loeb’s Third Point Capital. A section of the letter reads, “The Board and management have been working to evaluate opportunities to illuminate the value in our stock price for the benefit of all of our shareholders,” said Claiborne Deming, Chairman of the Board.”

Shortly afterward, Murphy Oil announced a $2.50 special dividend, a $1 billion share buyback program, and announced the separation of its downstream business into a separate company. Shares rose nicely on the news.

Claiborne Deming is the insider who recently purchased $1.2 million of Murphy Oil stock. The chairman purchased 20,000 shares of stock on the open market for approximately $60.86 per share, and the total transaction value amounted to $1,217,200 when the stock was bought on Feb. 27.

Deming served as president and CEO of the El Dorado, Ark.-based Murphy Oil from October 1994 through December 2008.

On Feb. 14, analysts at Oppenheimer & Co. raised their price target on Murphy Oil to $75 from a previous $65 based on the company’s strong Jan. 30 earnings report. Third Point Capital disclosed that it had increased its stake in Murphy Oil with the firm’s 13F regulatory filing on the same date.

A $75 price target from Oppenheimer reflects more than 23% upside from the purchase price of Mr. Deming’s stock at $60.86.

Foolish Bottom Line

Despite the broader market reaching multi-year highs, I believe readers will do well to follow in the footsteps of insiders at The Cheesecake Factory Incorporated (NASDAQ:CAKE), LogMeIn Inc (NASDAQ:LOGM), and Murphy Oil.

Feel free to express your opinion on these stocks or ask a follow-up question in the comments section below.

Thanks for reading, and consider subscribing to my posts for more Fool ideas on outperforming the market. Requests for future articles may be submitted to fool@johnmacris.com.

The article Reading the Tea Leaves: Conviction with Large Insider Buying originally appeared on Fool.com and is written by John Macris.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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