Insider buying is typically a strong signal that a stock is poised to move higher in the near future. The premise is simple in that insiders are just like the rest of the public in how they desire to make more money and as a result when these people purchase shares we can join them on the way higher. The following are three real estate entities and two healthcare stocks that have recently had notable insider buying of at least $450,000. As a caveat, please only consider this as a starting point in your investment.
American Realty Capital Properties (ARCP) focuses predominately on owning and managing single tenant retail and office properties. The company's stock has performed real well the past twelve months sitting right at a new $16.15 high and up approximately 50% during that time. Chairman and CEO Nicholas Schorsch sees the stock continuing to move higher, buying 30,000 shares on April 11 at $15.69 equating to approximately $470,000 million worth of stock. The company operationally has done well exceeding analyst estimates in three of the last four quarters. Moreover, the company has a very nice 6.1% dividend which has the added bonus of being paid out monthly. I think with the ongoing recovery in the real estate market, American Realty should continue to benefit. If one is looking to wisely diversify this position into other high-yielding real estate related companies, PennyMac Mortgage Trust (PMT) and Annaly Capital (NLY) are worth a look.
PennyMac is a REIT that invests primarily in residential mortgage loans. As the residential market especially has seen a rebound, PennyMac has been a nice beneficiary as the stock is up approximately 40% the past year while paying a very nice dividend which is currently at approximately 9%. The company is showing great returns on assets and equity of 7% and 16%, respectively, showing its management prowess. Moreover, the company has a relatively cheap 8x trailing P/E. I think this is worth a look for the investor looking to get a quality company in the real estate arena.
Annaly Capital is a well-known mortgage REIT focused predominately on buying agency-backed mortgages. The company's stock performance has not been anything to write home about as it has been essentially dead money the past year. However, it is definitely worth noting that the company has consistently paid a double digit dividend which currently stands at over 11%. Moreover, the company is trading at a comparatively cheap 1x price to book while generating strong returns on equity of 11%. Lastly, as the Federal Reserve looks to sooner rather than later exit its ongoing monthly purchase of $40 billion mortgage-backed securities, Annaly will be a big beneficiary as margins will expand even more.
Opko Health (OPK) is a biopharmaceutical company based out of Miami, Florida, and has worldwide operations primarily in the United States, Mexico, and Chile. The company generated $47 million in revenue the past twelve months, however, continues to burn cash and rack up net operating losses. Nevertheless, Chairman and CEO Dr. Frost bought 250,600 shares on April 9 equating to approximately $1.75 million worth of stock, clearly showing that he believes the stock should move higher in the future. It is worth noting that Opko is not for the conservative investor as it pays no dividend and has no earnings, but can see considerable upside if things stay on track and they can get some favorable reviews from the FDA on their late stage products. If looking for one other speculative biotechnology company with large insider ownership by the Chairman and CEO, MannKind (MNKD) fits the billing.
MannKind is a developmental drug company focused predominately on products relieving diabetes, most notably its AFREZZA product in late-stage clinical trials. The company has essentially no revenue (a miniscule $35,000 the past twelve months) while sustaining a loss in net income of $169 million over the same time-frame. Nonetheless, this speculative company, like Opko mentioned above, has a very large ownership stake by its Chairman and CEO, in the case of MannKind his name is Alfred Mann. Moreover, recently on December 20 2012, he bought a massive 40 million shares at $2.59 showing that he continues to believe the stock has more upside ahead.