Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

These Companies’ Insiders Don’t Fear Fed Tightening; Should One Follow Their Lead?

Page 1 of 2

All major U.S. stock indexes closed in the red on Wednesday, being dragged down by the falling energy equities. It might seem shocking to most of us how quickly stock market sentiment switches around. Most market participants have started to worry about a highly-probable rate hike this year, and its effects on the U.S. economy and stock markets in particular, but one should bear in mind that it may take quite some time until higher interest rates will make other asset classes’ returns attractive enough to propel investors to pull out their money from equities. Meanwhile, some companies have seen their insiders piling up more shares, which could somewhat suggest that these companies are prone to having a great future ahead. Even though the Securities and Exchange Commission was closed for Veterans Day on Wednesday and no filings were published, we will still analyze the insider buying activity of several companies that saw their insiders submit Form 4 filings on Monday and Tuesday.


Most investors can’t outperform the stock market by individually picking stocks because stock returns aren’t evenly distributed. A randomly picked stock has only a 35% to 45% chance (depending on the investment horizon) to outperform the market. There are a few exceptions, one of which is when it comes to purchases made by corporate insiders. Academic research has shown that certain insider purchases historically outperformed the market by an average of seven percentage points per year. This effect is more pronounced in small-cap stocks. Another exception is the small-cap stock picks of hedge funds. Our research has shown that the 15 most popular small-cap stocks among hedge funds outperformed the market by nearly a percentage point per month between 1999 and 2012. We have been forward testing the performance of these stock picks since the end of August 2012 and they have returned 102% over the ensuing 37 months, outperforming the S&P 500 Index by more than 53 percentage points (read more details here). The trick is focusing only on the best small-cap stock picks of funds, not their large-cap stock picks which are extensively covered by analysts and followed by almost everybody.

SciQuest Inc. (NASDAQ:SQI) has seen its top executive acquire more shares over the past several days. Stephen J. Wiehe, Chief Executive Officer and President since February 2001, reported purchasing 1,600 shares last Friday and 15,400 shares on Monday at prices in the range of $11.86-to-$12.1 per share, boosting his overall holdings to 635,603 shares. The provider of cloud-based business automation solutions for spend management released a strong third-quarter earnings report in late-October, which has positively impacted the company’s stock performance. SciQuest Inc. (NASDAQ:SQI) reported non-GAAP diluted net income per share of $0.08 on revenues of $26.3 million, compared with diluted net income per share of $0.07 on revenues of $25.9 million posted last year. Even so, the stock is still 15% in the red year-to-date, so the CEO’s bullishness might suggest his confidence in the company’s future prospects. The number of hedge funds monitored by Insider Monkey with positions in the company climbed to 13 from 11 during the second quarter, amassing approximately 15.30% of its outstanding shares on June 30. Robert G. Moses’ RGM Capital was the top equity holder of SciQuest Inc. (NASDAQ:SQI) within our database at the end of the second quarter, holding 2.45 million shares.

Follow Sciquest Inc (NASDAQ:SQI)
Trade (NASDAQ:SQI) Now!

Let’s head to the next page of the article, where the insider buying activity at Men’s Wearhouse Inc. (NYSE:MW) and Continental Building Products Inc. (NYSE:CBPX) is disclosed and discussed.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

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 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!