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We follow hedge funds and corporate insiders because our research has shown that they have an edge over ordinary investors. Insiders understand their companies and the industry way better than other investors. Sometimes they even have material non-public information. Hedge funds sometimes also have access to the material non-public information. Trading on such information is not allowed by law, but there are still insiders and hedge fund managers who break the rules. Some of them, like Raj Rajaratnam, were caught. Steven Cohen, the founder of SAC Capital and the 35th richest man in America, was also investigated by SEC recently, but he seems to be cleared.

Below we compiled a list of stocks both Cohen and insiders are bullish about. All companies have more than $10 billion market cap, were purchased by at least one insider during the past month, and Cohen’s SAC Capital invested at least $10 million in. The market data is sourced from Finviz.

Company Name

Ticker

Value

Activity

Insiders

APPLE INC

AAPL

99527

-56%

1

MEAD JOHNSON

MJN

99434

47%

1

SCHLUMBERGER

SLB

50672

-11%

2

HONEYWELL

HON

50377

28%

1

QUALCOMM INC

QCOM

43390

4150%

1

STRYKER CORP

SYK

33193

-49%

1

VMWARE INC

VMW

30465

14%

1

EATON CORP

ETN

30356

33%

1

TRANSOCEAN LTD

RIG

24781

227%

2

FORD MOTOR

F

12778

-35%

1

CHESAPEAKE ENERGY

CHK

11874

2053%

2

Apple Inc (NASDAQ:AAPL) is the biggest position in the 13F portfolio of SAC Capital as of September 30, 2011. SAC invested nearly $100 million in AAPL ,and there was one insider purchase during the past month. On November 29, Robert Iger purchased 1,370 shares at $374.4856 and another 1,300 shares at $375.3292. Now AAPL is trading at $379.07. It has a market cap of $361.36B and a P/E ratio of 14.05. Stephen Mandel’s Lone Pine Capital also invested $785 million in AAPL shares.

In the third quarter, Cohen significantly boosted his stakes in Qualcomm Inc (NASDAQ:QCOM) by 4150%. At the end of September, his SAC Capital disclosed to own $43 million worth of QCOM stocks. Since then, the stock returned 11.87%, outperforming the market by about 2 percentage points. During the past month, one insider bought QCOM. Francisco Ros purchased 275 shares at $53.7867 on November 28. Ros also bought 200 shares at $49.3167 in early September. Now QCOM is trading at $53.06.

Another mega-cap stock Cohen and insiders are bullish about is Schlumberger Ltd (NYSE:SLB), an oil and gas exploration and production company. Cohen invested $51 million in the stock as of September 30, and there is one insider bought SLB during the past month. Kjell-Erik Oestdahl bought 3730 shares at $67 on November 23. SLB is currently trading at $67.27. It has a market cap of $94.50B and a P/E ratio of 21.87. Ken Fisher’s Fisher Asset Management also had $487 million invested in SLB.

Another energy company, Chesapeake Energy Corp (NYSE:CHK), was purchased by two insiders over the past month. On November 25, Aubrey Mcclendon bought 11,000 shares at $22.7622. Earlier in November, another director Louis Simpson also bought 100,000 shares at $26.6911. Now CHK is trading at $22.64 per share. It has a market cap of $15.45B and a P/E ratio of 12.60. Cohen’s SAC Capital invested $12 million in CHK at the end of September. The fund increased its stakes by 2053% during the third quarter.

Other stocks both Cohen and insiders are bullish about include Honeywell International Inc (NYSE:HON), Ford Motor Co (NYSE:F), VMWare Inc (NYSE:VMW), Stryker Corp (NYSE:SYK), Mead Johnson Nutrition Co (NYSE:MJN), Eaton Corp (NYSE:ETN), and Transocean Ltd (NYSE:RIG). We strongly recommend investors to focus on the stocks that both insiders and hedge funds are bullish about. If insiders know about impending bad news about their stocks, they will postpone their purchases of the stock and avoid losses. That’s why we believe that these stocks are less likely to surprise investors with negative news.

Disclosure: I am long CHK.

Source: Steve Cohen And Insiders Are Bullish On These Stocks