12 Stocks Insiders And Hedge Funds Are Bullish About

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Includes: APA, BLK, ECL, ED, FAST, PNC, PSA, RAI, RSG, SPGI, VMW, WFC
by: Insider Monkey

Academic research has shown that corporate insiders and hedge funds have an edge over ordinary investors. The reason is not difficult to understand. Insiders have more exposure to their companies’ performances. They know their companies and their industries much better than others, and they sometimes even have material non-public information. Hedge funds, on the other hand, sometimes also cross the line to obtain such information. Other times hedge funds have an edge because they usually hire experienced investment professionals and devote significant resources in researching stocks.

In this article, we are going to focus on the stocks that insiders and hedge funds are bullish about. Below we compiled a list of US stocks with at least $10 billion market cap and at least one insider purchase over the past month. The market data is obtained from Finviz. We ranked them by the number of hedge funds that reported to own these stocks at the end of September.

Ticker

Company

No. of HFs

No. of Insiders

WFC

Wells Fargo & Company

69

1

APA

Apache Corp.

30

1

VMW

VMware, Inc.

28

1

MHP

The McGraw-Hill Companies

26

1

PNC

PNC Financial

26

1

ECL

Ecolab Inc.

19

1

BLK

BlackRock, Inc.

18

1

PSA

Public Storage

16

1

RAI

Reynolds American Inc.

15

1

RSG

Republic Services, Inc.

15

1

ED

Consolidated Edison Inc.

13

1

FAST

Fastenal Company

11

1

Click to enlarge

The most popular stock among hedge funds and insiders is Wells Fargo & Company (NYSE:WFC). The stock was bought by one insider during the past month and there are 69 hedge funds with WFC positions at the end of the third quarter. On December 28, a director at Wells Fargo, John Baker, purchased about 1,000 shares at around $27.26 per share. Now WFC’s price has increased $2 to $29.35 per share. WFC also has a relatively low P/E ratio of 10.85. Among the 69 hedge funds that reported to own WFC, Warren Buffett’s Berkshire Hathaway had the largest WFC position. The fund had $8.7 billion invested in this stock at the end of the third quarter. John Paulson, Lee Ainslie, Ken Fisher, and Tom Russo are also bullish about WFC.

Apache Corp (NYSE:APA) is also very popular among hedge funds and insiders. During the past month, there was one insider purchased the stock. William Montgomery bought 2,000 shares at $88.715 on December 20. Montgomery also purchased 2,000 shares at $90 in October. Today APA is trading at $98.49 per share, returning 11% in less than one month. The stock has a market cap of $38B and a relatively low P/E ratio of 9.6. At the end of September, there are 30 hedge funds with APA positions. For example, Jim Simons’ Renaissance Technologies boosted its APA stakes by 165% over the third quarter. As of September 30, 2011, the fund had $74 million invested in APA.

Other large-cap stocks that corporate insiders and hedge funds are bullish about include VMware Inc (NYSE:VMW), PNC Financial Services Group Inc (NYSE:PNC), BlackRock Inc (NYSE:BLK), Public Storage (NYSE:PSA), and Reynolds American Inc (NYSE:RAI). Our past studies have shown that investors can outperform the market simply by imitating these smartest investors in the world. We urge investors to do some deep research on the stocks that both insiders and hedge funds love and consider adding some of the positions to their portfolios.

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