Insider Monkey has been regularly publishing articles about the stocks insiders buy like crazy since the beginning of December. The stocks we highlighted in those 6 articles have performed spectacularly compared to the S&P 500. Insiders know more about their companies than do most investors. This is especially true in smaller companies which are only followed by a few analysts, if any at all. Academic studies conducted during the past 40 years confirm this. Stocks bought by several insiders outperformed the S&P 500 index funds by about 7 percentage points per year in those studies. Last week, we brought 5 companies insiders are buying to your attention. Here are their performance numbers since we highlighted them:
1. Winmark Corp (WINA): This is the only stock that underperformed last week. Winmark returned only 0.5%.
2. Trailer Bridge Inc (TRBR): Trailer Bridge was last week’s best performer; it returned 19% vs. 1.7% for the S&P 500 index.
3. Cogent Communications Group Inc (CCOI): There have been recent insider purchases at Cogent Communications around $14 per share. On January 7th the stock closed at $13.74- less than what the insiders paid for it. After we highlighted this stock, it returned 10.4%.
4. Diamond Foods Inc (DMND): This stock had significant insider purchases 3 months ago when it was trading around $41. More recently Diamond Foods’ Chairman and CEO Michael J Mendes purchased additional shares below $52. Diamond returned 2.4%, beating the market by a small margin.
5. EQT Corp (EQT): There are recent insider purchases in EQT Corp. The largest transaction was two months ago at $38.38, while recent transactions occurred below $45. EQT returned 3% during the past week.
Overall, four out of five stocks we picked managed to beat the market. The average return of this portfolio was 7.1% vs. 1.7% for the S&P 500. These stocks outperformed the market by 5.4 percentage points in one week. All of our 6 weekly selections since December beat the S&P 500 index. Here are three stocks insiders are buying like crazy last week:
1. Trailer Bridge Inc (TRBR): Another insider of Trailer Bridge purchased 3,000 shares at $2.97 on Monday, the day after we published our article about insider trading at TRBR. The stock closed the week at $3.50.
2. Ladenburg Thalmann Financial Services Inc (LTS): There has been several insider purchases over the past two years. The stock was trading at $0.45 per share in June 2009, and $1 per share on October 1, 2010. Ladenburg Thalman actually satisfied our criteria on October 1st, but we didn’t share this information on our website. The latest insider purchases were at $1.20 and LTS closed at $1.29 on Friday.
3. Career Education Corp (CECO): Career Education Corp has been satisfying our criteria over past couple of months and we talked about it several times. In November and early December insiders were buying CECO shares at around $18. The stock closed at $21.57 on Friday. Steve Eisman’s Frontpoint Partners has been shorting for-profit education companies whereas Richard Blum is long CECO.