We track quarterly 13F filings from hundreds of hedge funds, including billionaire Leon Cooperman’s Omega Advisors. We use the information in these filings to help us develop investing strategies; for example, we have found that the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year (learn more about our small cap strategy). We also like to review individual funds’ filings for stocks seeing recent insider buying; studies generally show that insider purchases are weak bullish signals and so we think that these stocks can serve as additional investment ideas for further research. Here are five stocks from Cooperman’s most recent 13F that at least one insider has bought in the last three months (or see the full list of stocks Omega reported owning):
The fund reported a position of 7.7 million shares in American International Group Inc (NYSE:AIG), which lost its place as the most popular stock among hedge funds during the first quarter of 2013 (check out the full top ten list). A Board member bought 10,000 shares of American International Group Inc (NYSE:AIG) in May. The insurer trades at a significant discount to the book value of its equity with a P/B ratio of 0.7, and has at least some upside potential even after selling off some of its assets to create shareholder value. With analyst expectations implying a forward earnings multiple of 11, we’d be interested in further investigating the company.
Omega disclosed ownership of 7.2 million shares of Linn Energy LLC (NASDAQ:LINE) in the filing; we recorded an insider buying stock in the $7.8 billion market cap oil and gas company last month. Linn Energy LLC (NASDAQ:LINE) currently pays a quarterly dividend of 72.5 cents per share, which makes for an annual yield of over 9%, though it has had to borrow money in order to cover these payments as well as the company’s capital expenditures. We’d note that the forward P/E is 21, so in terms of value the stock is not cheap with earnings perhaps not being high enough going forward to cover current dividend payments.