Long-term investing is never as exciting as in and out trading. The gains come and go, but all-in-all, investing is a lot more stressful, a lot less risky, and can be planned a lot more carefully. One of the key tenets of investing we look at is management. We believe that companies with management that act like an investor have the best interest of investors. How can one gauge if a company acts like an investor?
One of the best ways is if the company owns shares. You would be shocked how many companies have insiders with less than 1% of their own shares. If your own wealth is not impacted by your investments, what concern does management have for share price?
Therefore, we like to avoid investing in companies that do not have insiders with a nice portion of shares – usually 10%.
Below we have listed a group of companies that have 10% insider shares. On top of this, these are companies that have seen rises in insider shares in the past six months. These investors, who are also insiders, are buying shares right now. We see this as a solid signal for long-term investments, and it is one of many indicators that should be investigated when investing.
Here is the list:
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Out of these companies, the ones that are currently performing well:
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For the year, Penn National Gaming is seeing great upside, and it is seeing a lot of insider buying as well. The company is up over 28% for the year, and instead of management selling shares, they are buying more.
Two more companies that are looking solid in this indicator are GNC Holdings (GNC) and Cintas (CTAS). These two companies have seen good gains in the past quarter and half year, respectively, and are seeing more insider buying.
Insiders are not always great investors or signals of the exact moment to buy, but what we do know is that we want to invest in companies that have insiders with significant ties to share price and are buying their company, not selling.
These stocks fit that criteria very well.
Disclosure: I am long ORCL.