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Analysts often follow the buying trends of company insiders because they know more about their companies than anyone else. If company insiders start buying more stock, it’s a bullish sign to take a second look.

We ran a screen on underperforming stocks, with quarterly performance under -30%, for those that also appear undervalued to earnings growth (with PEG under 1). We screened this universe for stocks seeing significant net insider buying over the last six months.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.


We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here:



Do you think insiders are calling it right? Use this list as a starting-off point for your own analysis.

List sorted by net insider purchases as a percent of share float.

1. Jefferies Group Inc. (JEF):
Investment Brokerage Industry. Market cap of $2.66B. The stock is down 33.92% over the past quarter. PEG at 0.47. Net insider purchases over the last six months at 766.0K, which is 0.37% of the company's 207.35M share float. The stock is currently stuck in a downtrend, trading 12.1% below its SMA20, 16.41% below its SMA50, and 27.89% below its SMA200. It's been a rough couple of days for the stock, losing 18.5% over the last week.

2. Mercer International Inc. (MERC): Paper & Paper Products Industry. Market cap of $323.67M. The stock is down 42.42% over the past quarter. PEG at 0.50. Net insider purchases over the last six months at 98.53K, which is 0.21% of the company's 45.85M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 3.32). It's been a rough couple of days for the stock, losing 22.86% over the last week.

3. Prospect Capital Corporation (PSEC): Asset Management Industry. Market cap of $722.03M. The stock is down 35.28% over the past quarter. PEG at 0.41. Net insider purchases over the last six months at 128.27K, which is 0.13% of the company's 96.25M share float. The stock is currently stuck in a downtrend, trading 15.2% below its SMA20, 20.09% below its SMA50, and 23.65% below its SMA200. It's been a rough couple of days for the stock, losing 22.33% over the last week.

4. Kronos Worldwide Inc. (KRO): Specialty Chemicals Industry. Market cap of $2.34B. The stock is down 32.01% over the past quarter. PEG at 0.69. Net insider purchases over the last six months at 15.29K, which is 0.07% of the company's 21.56M share float. The stock is currently stuck in a downtrend, trading 22.24% below its SMA20, 21.79% below its SMA50, and 11.47% below its SMA200. It's been a rough couple of days for the stock, losing 35.15% over the last week.

5. MBIA Inc. (MBI): Property & Casualty Insurance Industry. Market cap of $1.31B. The stock is down 34.30% over the past quarter. PEG at 0.37. Net insider purchases over the last six months at 100.0K, which is 0.07% of the company's 147.69M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.56). The stock is a short squeeze candidate, with a short float at 14.22% (equivalent to 7.78 days of average volume). It's been a rough couple of days for the stock, losing 28.49% over the last week.

6. A. Schulman, Inc. (SHLM): Specialty Chemicals Industry. Market cap of $523.35M. The stock is down 30.34% over the past quarter. PEG at 0.77. Net insider purchases over the last six months at 21.42K, which is 0.07% of the company's 29.85M share float. Offers a good dividend, and appears to have good liquidity to back it up--dividend yield at 3.65%, current ratio at 2.14, and quick ratio at 1.34. The stock is currently stuck in a downtrend, trading 18.19% below its SMA20, 22.73% below its SMA50, and 19.88% below its SMA200. It's been a rough couple of days for the stock, losing 22.51% over the last week.

7. Brown Shoe Co. Inc. (BWS):
Specialty Retail, Other Industry. Market cap of $343.17M. The stock is down 33.59% over the past quarter. PEG at 0.73. Net insider purchases over the last six months at 23.50K, which is 0.06% of the company's 42.51M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.07). The stock is a short squeeze candidate, with a short float at 24.9% (equivalent to 14.21 days of average volume). It's been a rough couple of days for the stock, losing 23.13% over the last week.

*Insider data sourced from Yahoo! Finance, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 7 Underperforming, Undervalued Stocks Being Snapped Up by Insiders