Hedge funds usually devote significant resources to researching stocks. Sometimes, they even cross the line to try to obtain material non-public information before making investments (yes, Rajaratnam is caught but think about other hedge fund managers who operate on the gray side). Corporate insiders also sometimes trade based on the material non-public information they have. Other times they have an edge because they know their companies and industries much better than almost all other investors. We believe that by imitating the investments of hedge funds and corporate insiders, investors are more likely to beat the market in the long term.
Below we compiled a list of stocks that hedge funds and insiders are bullish about recently. All stocks were bought by hedge funds recently and reported through 13G and 13D filings. This means that these hedge funds are extremely bullish about these stocks that they purchased at least 5% of outstanding shares of the company. These stocks were also purchased by at least two insiders over the past three months.
Here are the eight stocks on the list above with market cap over $1 billion.
Morgan Stanley (MS): Morgan Stanley was purchased by five insiders over the past three months and lost 39.82% since the beginning of this year. The most recent purchase was from its director Hutham Olayan, who bought 5,000 shares at $20 on August 5. A day before that James Gorman (President and CEO of Morgan Stanley), Ruth Porat (CFO), and Paul Taubman (Co-President of Institutional Securities) bought 175,000 shares in total at slightly higher than $20 per share. Another director James Owens also bought 5,000 shares at $22.04 on August 2. However, MS is now trading at $16.57. It has a market cap of $31.4B and a P/E ratio of 9.6. According to the 13G filing of Michael Novogratz’s Fortress Investment Group on October 27th, Fortress boosted its passive stake to 5% in MS and now takes about 9.27 million shares in the stock. Andreas Halvorsen’s Viking Global initiated a brand new $140 million in MS over the second quarter.
Owens-Illinois, Inc. (OI): Owens-Illinois manufactures glass containers with 81 glass manufacturing plants in more than 20 countries. OI was purchased by four insiders over the past three months and lost 36.71% since the beginning of this year. The director of the company, Helge Wehmeier, bought 5,000 at $18.47 on August 15. Wehmeier bought another 1,809 shares at $14.67 on October 5. On the same day, David Ho purchased 1,210 shares of the stock at the same price. Other insiders who purchased the stock include Richard Crawford and Albert Stroucken. OI is currently trading at $19.97 per share. It has a market cap of $3.2B and P/E ratio of 17.99. Atlantic Investment Management filed 13D on October 12th for its 5.1% activist stake in the stock. The firm now has 8.4 million shares in OI.
Navistar International Corp. (NAV): Navistar is a vehicle manufacturer. NAV was purchased by three insiders over the past three months and lost 29.36% since the beginning of this year. In September, three directors of the company, Steven Klinger, Diane Gulyas, and Stanley McChrystal purchased 4,700 shares of NAV in total at prices ranging from $33.63 to $36.99. Now the stock is trading at $41.06. It has a market cap of $3.0B and P/E ratio of 2.09. According to the 13D Filing of Carl Icahn’s Icahn Capital on October 13th, the firm increased its activist position in the stock to 7.11 million shares and now controls 9.8% activist stake in the company. Jeffrey Altman had $388 million invested in NAV at the end of June.
EXCO Resources Inc (XCO): EXCO Resources is an independent oil and natural gas company engaged in the exploration, exploitation, development and production of onshore North American oil and natural gas properties. XCO was purchased by two insiders over the past three months and lost 38.38% since the beginning of this year. Ares Corporate Opportunities Fund Li bought 200,000 shares of XCO at slightly above $12 in August. Wilbur Ross’s Invesco Private Capital filed Form 4 on October 17th. It purchased 7,900 shares at $9.99 on October 13th. According to Invesco’s 13D at the end of August, it owned 26.78 million shares, or 12.5% activist stake in XCO. XCO is now trading at $11.57. It has a market cap of $2.6B and a P/E ratio of 27. Jean-Marie Eveillard’s First Eagle Investment Management initiated a brand new 600,000 shares of XCO over the second quarter.
Lincare Holdings Inc. (LNCR): Lincare provides oxygen and other respiratory therapy services to patients in the home. LNCR was purchased by three insiders over the past three months and lost 11.83% since the beginning of this year. On September 19, John Byrnes, director of Lincare, bought 25,000 shares at $20.86 per share. Prior to that, Chester Black, another director of the company, purchased 11,400 shares in total on September 2 at slightly over $20 per share. The CFO of the company, Paul Gabos, also bought 25,000 shares at $20.22 on August 22. LNCR is currently trading at $23.30 – neally three dollars higher than its price when these three insiders purchased it. It has a market cap of $2.0B and P/E ratio of 12.08. On October 11th, Larry Robbins’ Glenview Capital revealed that it owned 5.73 million shares in LNCR, which is a 6.14% ownership stake.
Clearwire Corporation (CLWR): Clearwire is provides 4G wireless broadband services. CLWR was purchased by three insiders over the past three months and lost 64.08% since the beginning of this year. On October 7, director of Clearwire, William Blessing purchased 10,000 shares of CLWR at $1.7. Earlier in August, two other directors Jose Collazo and John Stanton purchased 72,000 and 275,500 shares respectively at prices ranging from $1.78 to $2.75 per share. CLWR is currently trading at $2.02 per share. It has a market cap of $1.7B. According to the 13G filing of Lee Hobson’s Highside Capital on October 17th, Highside now has 16.17 million shares of CLWR, corresponding a 6.5% stake of the stock. Over the second quarter, John Brennan’s Sirios Capital Management initiated a brand new $32 million CLWR.
Lions Gate Entertainment Corp (LGF): Lions Gate Entertainment Corp is a global entertainment company with a diversified presence in motion picture production and distribution, television programming and syndication, home entertainment, family entertainment, digital distribution and new channel platforms. LGF was purchased by two insiders over the past three months and returned 26.11% since the beginning of this year. Mark Rachesky, director of the company, bought 11,040,493 shares at $7 on August 29. As the large shareholder of LGF, Carl Icahn’s Icahn Capital increased his holding of the stock by 756,840 shares to 45,529,291 shares in mid August. Icahn purchased the stock at around $7 per share. Now LGF is trading at $8.44. It has a market cap of $1.1B and a P/E ratio of 63.15.
Chemtura Corporation (CHMT): Chemtura Corporation is a diversified global developer, manufacturer and marketer of performance-driven engineered specialty chemicals. CHMT was purchased by seven insiders over the past three months and lost 29.72% since the beginning of this year. The most recent purchase occurred on October 21. Chet Cross, EVP and Group President of Chemtura, bought 700 shares at $10.94. Billie Flaherty, SVP of the Gerneral Counsel and Secretary at the company, purchased 1,500 shares at $12.68 on September 13. In August, Craig Rogerson, James Crownover, Jeffrey Benjamin, Stephen Forsyth, and Alan Cooper bought over 100,000 shares in total at prices ranging from $11 to $13. Now CHMT is trading at $11.77. It has a market cap of $1.1B. On October 26th, WS Management filed a 13G, indicating that it has boosted its stake in CHMT to 4.89 million shares, corresponding to a 5.072% passive stake. D. E. Shaw increased his position in CHMT by 679% to over $28 million during the second quarter.