As we enter a new year in 2013 on a bullish note with the legislators coming through on what looks to be at least a temporary deal to avert the "Fiscal Cliff," investors continue to search for the next top-performing stocks. Of course, it is always much easier said than done on how to go about finding a rationale strategy and so one strategy that may be worth exploring is researching stocks with recent large insider buying. The premise is simple, yet profound, due to one simple reason in that insiders are just like the rest of the public in how they desire to make more money and as a result when people purchase shares who arguably have the best view into a company's operations and future prospects, we can benefit by riding on their coattails. The following are stocks that have recently had notable insider buying of at least $1 million and seemed poised to move higher as the fundamentals and/or future prospects look compelling. As a caveat, please only consider this as a stating point in your investment research as these are only the opinions of the blogger:
SandRidge Energy (SD) is a diversified oil and natural gas company based out of Oklahoma and operating predominately in the Mid-West and Permian Basin. The stock price has been less than inspiring the past 52-weeks down approximately 20% and sitting well off its $9.0 per shares 52-week high. Nonetheless, this seems to have created a nice buying opportunity the for well-respected value firm and major shareholder Fairfax Financial Holdings. The company just bought collectively from December 27-31 3,025,000 shares at an average price of $6.25 equating to just under $18.9 million worth of stock. This is obviously very bullish and with many feeling that energy has become undervalued, companies like SandRidge would be a nice beneficiary with rising commodity prices. In addition, with the company handily exceeding consensus analysts' estimates and trading at a relatively cheap 1.15x price-to-tangible book value, I believe this is a company that is worth putting on your radar.
Biotechnology firm MannKind (MNKD) based out of California is focused predominately on creating products to help alleviate diabetes and cancer patients. The company's stock has been basically flat the past 52-weeks sitting right between its 52-week high and low. Chairman, CEO, and major shareholder Alfred Mann seems to think there is a great value though buying an astounding 40 million shares on December 21 at $2.59 equating to a $103.6 million worth of stock. As is the case with most biotechnology stocks, the balance sheet is not pretty and MannKind is no exception as the company was just about to run out of cash until it recently authorized the sale and dilutive effect of issuing another 200 million shares while still sitting on over $400 million in debt. On the flip side though, the company has a promising and if approved, very lucrative diabetes treatment drug and the Chairman/CEO seems to think there is great promise through this large insider purchase. I'd see this is as potentially a nice speculative buy.
Diversified entertainment and media conglomerate Liberty Media (LMCA) based out of Colorado is a behemoth with $2.5 billion in revenue over the past twelve months while its market capitalization exceeds well over $14 billion. The company's stock has been simply stellar the past 52-weeks as it sits at a new 52-week high at approximately $120 per share. Nevertheless, Chairman and major shareholder John Malone sees more upside ahead buying collectively from December 17-18 490,957 shares at an average price of $115 equating to an impressive $56.4 million worth of stock. The company has absolutely obliterated consensus analyst estimates the past four quarters which is always encouraging while it continues to sport very healthy profit margins exceeding 69% and returns on equity exceeding 30%. The company does trade at some rich valuations with a price more than double book value and more than five times its sales, however which the company firing on all cylinders and such bullish insider buying, I think this is worth exploring as a speculative buy.
Property and casualty insurer W.R. Berkeley (WRB) operates worldwide in approximately 40 countries and is a recognized name in the industry with over $5.5 billion in annual revenues and a market capitalization exceeding $5 billion as well. The company has been stable the past year moving up approximately 10% and now sitting near its $40.39 52-week high. The Vice President-Corporate Controller, Clement Patafio, seems to think there is more upside ahead buying on December 17 63,570 shares at an average price of $39.33 equating to a sizeable $2.5 million worth of stock. The company has been performing nicely this past year exceeding consensus analyst estimates, while sporting nice returns on equity exceeding 11%. The company is relatively cheap trading at just 1x enterprise value to sales while generating over $600 million in free-cash-flow allowing the company to conservatively continue raising its dividend. I think with the company performing so well, reasonable valuations, and a growing dividend, WRB is worth a look.
Office real estate investment trust Parkway Properties (PKY) has properties throughout the United States with a focus on the Southeastern and southwestern states along with Chicago. The stock has performed greatly the past year and currently sits right near its $14.72 52-week high. On December 10, major shareholder TPG Group Holdings upped its stake greatly by buying just over 5.8 million shares at $13 per share equating to over $75.6 million worth of stock. Looking deeper, the company pays a nice 3.2% yield which was not only maintained, but raising in the summer quarter of 2012. In addition, the company has blown past consensus earnings estimates the past four quarters while the real estate market has continued to show new signs of life. I think this is a company worth researching for a long-term income oriented investor.