Tracking insider trades, whether they are purchases or sales of shares, is an important activity any investor should consider doing. This is because insider trades, particularly purchases, may be indicative of better short-term returns based on past research. This is why today, we highlight three firms, Angie’s List Inc (NASDAQ:ANGI), Richardson Electronics, Ltd. (NASDAQ:RELL) and Amkor Technology, Inc. (NASDAQ:AMKR), which have recently seen significant acquisitions of shares by insiders, who are expected to have more information about these companies than the general public.
We’ll also briefly discuss hedge fund activity on Angie’s List Inc (NASDAQ:ANGI), Richardson Electronics, Ltd. (NASDAQ:RELL) and Amkor Technology, Inc. (NASDAQ:AMKR) to get a more complete picture as to how those in the know are treating these firms. We pay attention to hedge funds’ moves because our research have shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular stock picks in real time since the end of August 2012. These stocks returned 123.1% since then and outperformed the S&P500 Index by 66.5 percentage points (see more details here). That’s why we believe it is important to pay attention to hedge fund sentiment. Plus, we also don’t like paying huge fees.
Let’s start with Angie’s List Inc (NASDAQ:ANGI), the firm being among the three companies we’re highlighting now which recently saw the greatest number of insider purchases. Just in July alone, we have recorded eight instances of insiders acquiring shares of the firm. The most recent purchase was made by Chief Accounting Officer Charles Hundt, who bought 13,579 shares yesterday at a price of $4.47, which amounts to just over $60,000. On July 29, Director Mark Britto purchased 15,000 shares of Angie’s List Inc for $4.35, at a total cost of $65,250. On July 27, Interim CEO and COO Mark Howell, CFO Thomas Fox, and Director Michael Maurer bought 50,000 shares at $4.15, 4,000 shares at $3.90, and 26,000 shares at $3.75, respectively. Meanwhile, Directors Steven Kapner and John Chuang bought 3,415 shares each at $6.07 per share on July 15. These votes of confidence are especially interesting in light of activist investor Eric Semler’s TCS Capital Management’s disclosure on Wednesday, July 29, of a 5.4% stake in Angie’s List. TCS said that it wanted to open a dialogue with Angie’s List about a potential sale, its CEO selection, and its operations. The involvement of an activist comes as Angie’s List’s stock price has been pummeled, going down by over 20% year-to-date and a more drastic 40% over the past 12 months. Hedge funds Insider Monkey follows appear to be bullish on the stock, however, as total holdings only decreased by 2.45% quarter-over-quarter by the end of the first quarter, to $65.48 million, despite the stock’s 5.78% decline in the first quarter. The stock was also in 15 hedge funds’ portfolios at the end of the first quarter of 2015, up from nine in the previous quarter. Those who were long in the stock were rewarded in the second quarter, when the stock climbed by 4.94%. PAR Capital Management, led by Paul Reeder and Edward Shapiro, established the most outsized position in Angie’s List Inc (NASDAQ:ANGI) in the first quarter, buying 1 million shares worth about $5.87 million. By March 31, Wallace R. Weitz & Co., managed by Wallace Weitz, held the most valuable position in Angie’s List with a $22.9 million position made up of 3.9 million shares.