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.

Unusual Insider Buying at These 3 Companies; Wal-Mart Stores Inc. (WMT) And HP Inc. (HPQ) Among Them

Page 1 of 2

U.S. equities rallied on Friday after the Bureau of Labor Statistics released a strong November jobs report, ending the week with modest gains. Analysts believe that the numbers embedded in this report support an interest rate increase by the Federal Reserve at its policy meeting on December 16. But why would market participants  and the Fed in particular care about the job growth in the U.S.? Simply put, consumer spending accounts for two-thirds of the nation’s GDP figure, so it’s no wonder why the market posted massive gains on Friday. Meanwhile, both insider buying and selling activity slowed down last week relative to the previous one. Statistics reveal that insiders sold 25 times more worth of stock than they bought last week, so the ratio of insider selling over insider buying still remains at relatively high levels. Moving on to the underlying purpose of this article, insider buying activity is generally perceived as a bullish signal by most market participants. The only logical explanation as to why an insider would buy his/her company’s stock is the belief that the company’s shares are undervalued. For that reason, this article will discuss several notable insider buys registered at three companies last week.

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 38 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.

HP Inc. (NYSE:HPQ) witnessed insider buying last week for the first time in three years. Director Rajiv Gupta reported purchasing an 80,000 share-block on Wednesday at a weighted average price of $12.00, boosting his stake to 105,766 shares. HP recently completed its previously-announced separation from the combined Hewlett-Packard, so let’s try to briefly evaluate HP’s printing and personal systems businesses. It is widely-known that the demand for personal computers has been slowing down in recent years, as consumers have been holding onto their PCs for a longer period of time. Therefore, the company has developed convertible notebooks, detachable notebooks, and commercial tablets in an attempt to meet the fast-changing consumer preferences, but the slowing PC business is still impacting HP’s financial and stock performance. HP’s printing business is also challenged by the competitive pricing environment, especially by the pricing from its Japanese competitors. HP Inc. (NYSE:HPQ)’s fiscal 2015 full-year net revenue totaled $103.4 billion, which was down from $111.5 billion reported last year. Even so, HP shares are trading at a very cheap trailing price-to-earnings ratio of only 4.97, which compares with the average of 22.71 for the companies included in the S&P 500 benchmark. Peter Adam Hochfelder’s Brahman Capital added a 7.75 million-share position in HP Inc. (NYSE:HPQ) during the third quarter.

Follow Hp Inc (NYSE:HPQ)
Trade (NYSE:HPQ) Now!

Let’s move on to the second page of this daily insider trading article, where we discuss the insider buys registered at Wal-Mart Stores Inc. (NYSE:WMT) and Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH).

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...
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 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!