There are many factors one can look at in order to make the best financial decision possible. One of the best indicators one can use is notable insider buying. Executives sell stock for many reasons, but buy only for one: to make more money. These are the people who have the best view of their respective companies operations, so why not take heed with their investment moves? The companies mentioned below have been experiencing notable insider buying, so lets analyze if we should follow suit.
OPKO Health, Inc. (OPK), a pharmaceutical and diagnostics company, engages in the discovery, development and commercialization of novel and proprietary technologies primarily in the United States, Chile and Mexico. On Dec. 9, Chairman and CEO Dr. Phillip Frost bought 20,000 shares and currently owns close to a massive 110 million shares. The company is speculative, trading at over 30x price/sales and enterprise revenue/sales, almost 14x price/book, and losing approximately $25 million in net income this past year. However, Dr. Frost has a stellar track record in his previous ventures and is definitely putting his money where his mouth is in OPK. Moreover, the company has a promising pipeline and worthy of a speculative buy.
RAIT Financial Trust (RAS) operates as a self-managed and self-advised real estate investment trust. On Dec. 6, major shareholder Rima Management filed an SEC Form 4 showing collectively over the past two months the purchase of a massive 713,823 shares. The company looks to be a purely value play, trading at a paltry .2x price/book and 5.5% dividend yield. The income statement isn't pretty, with RAS losing almost $9 million this past year, but consensus estimates expect RAS to return to profitability, and in the meantime, we get paid a nice dividend to wait. I'd buy RAS here.
NII Holdings, Inc.(NIHD) through its subsidiaries, provides wireless communication services under the Nextel brand name to businesses and individuals in Mexico, Brazil, Argentina, Peru, and Chile. On Dec. 9, President of Nextel Brazil bought a sizeable 38,770 shares. NIHD is a nice buy not trading at a cheap .5x price/sales, .6x price-to-expected-growth, 1x price/book, and just 3x enterprise value/EBITDA.
Biotechnology firm Incyte (INCY) had some massive insider buying on Dec. 9 by major shareholder Baker Brothers Life Sciences buying 403,521 shares. INCY is somewhat similar to OPK in having ugly financials, with INCY losing approximately $100 million in net income this past year and having a negative book value of approximately $1.50/share, but this massive insider buying is encouraging, along with some favorable recent lab studies. This is a speculative buy more for the aggressive investor.
Virtualization software giant VMware (VMW) had a big buy by major shareholder EMC on Dec.12 of 47,000 shares. It's hard to see the value with VMW when it's trading at over 8x price/book, 38x enterprise value/EBITDA, and a trailing 58x price/earnings. However, the company is still experiencing great growth of over 30% year over year, and has approximately $3.5 billion in net cash. This is for the speculative buyer.
Republic Services, Inc. (RSG) provides non-hazardous solid waste collection, transfer and disposal services for commercial, industrial, municipal, and residential customers. On Dec. 8, Major shareholder Cascade Investment purchased a massive 2.1 million shares. This of course is the investment vehicle of Bill Gates and now holds over 65 million shares of RSG. The company has attractive valuations at just 1x price-to-expected growth, 1.2x price/sales, 1.3x price/book, and an attractive and growing 3.3% dividend yield. I would follow Cascade and buy RSG.
EXCO Resources, Inc. (XCO), an independent oil and natural gas company, engages in the exploration, exploitation, development and production of onshore North American oil and natural gas properties with a focus on shale resource plays. On Dec. 14, major shareholder Oaktree Funds bought a considerable 2 million shares and now owns close to 40 million shares in total. The company has nice valuations at .6x price to expected growth, 1.2x price/book, 7x enterprise value/EBITDA, and decent 1.6% dividend yield.
Sources: SEC Filings, GuruFocus, Yahoo