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We track corporate insiders because we think they have an edge over ordinary investors and are thus worth imitating. The reason is simple. These people usually have big exposure to their companies’ performance. It makes no sense for them to increase their exposure unless they have strong reasons to believe that their purchases will generate profits. Moreover, corporate insiders sometimes even trade on material non-public information, which is prohibited by law. They might be sent to jail one day, but investors who benefit from such information by imitating the insiders will be free.

Below we compiled a list of basic materials stocks insiders are bullish about. All companies have market cap of at least $2 billion and were purchased by at least one insider during the past month. The market data is sourced from Finviz.





Apache Corp.



Energy Transfer Equity, L.P.



Diamond Offshore Drilling Inc.



Kinder Morgan Management LLC



Valhi, Inc.



Chesapeake Midstream Partners, L.P.



NuStar Energy L.P.



Arch Coal Inc.



Laredo Petroleum Holdings, Inc.



Kronos Worldwide Inc.



Rosetta Resources, Inc.



Molycorp, Inc.



DCP Midstream Partners LP


Laredo Petroleum Holdings Inc (NYSE:LPI) was bought by most insiders during the past month. There are four corporate insiders who purchased the stock. Randy Foutch bought 2,000 shares at $18.61 and Kenneth Dornblaser bought 4,300 shares at $18.50 on December 19. One day later, F. L. Rooney purchased 294,118 shares at $17 and Donald Wolf bought 3,000 shares at $17.85. Today LPI is trading at $21.10 per share, up about $3 from the prices at which these four insiders purchased. The stock has a market cap of $2.7B and a P/E ratio of 19.09.

One mega-cap basic materials stock that insiders love is Apache Corp (NYSE:APA), which was purchased by one insider during the past month. On December 20, William Montgomery bought 2000 shares at $88.715 per share. Montgomery also purchased 2000 shares at $90 earlier on October 19. Now the stock is trading at $96.38. It has a market cap of $37.7B and a relatively low P/E ratio of 9.52. According to our statistics, there are 30 hedge funds reported to own APA at the end of September. For example, both Ric Dillon’s Diamond Hill Capital and Boykin Curry’s Eagle Capital Management had $100+ million invested in APA. Jim Simons’ Renaissance Technologies also boosted its APA stakes by 165% to $74 million over the third quarter.

Another large-cap basic materials stock that insiders are buying is Energy Transfer Equity LP (NYSE:ETE). During the past month, there was one insider who purchased the stock. On December 23, Kelcy Warren bought 1,000,000 shares at $36.25. Warren also purchased 339,152 shares in August at prices ranging from $36.95 to $38.94. Now ETE is trading at $40.42 per share. It has a market cap of $9.0B and a P/E ratio of 30. Chuck Royce’s Royce & Associates disclosed to own $18.5 million worth of ETE shares at the end of September. Jim Simons and Jean-Marie Eveillard are also bullish about ETE.

Insiders are also in favor of Diamond Offshore Drilling Inc (NYSE:DO), Kinder Morgan Management LLC (NYSE:KMR), Valhi Inc (NYSE:VHI), Chesapeake Midstream Partners LP (CHKM), NuStar Energy LP (NYSE:NS), and Arch Coal Inc (NYSE:ACI). Our past studies have shown that insider purchases on average outperform the market over the following 12-month period. We believe that investors are likely to beat the market on the average simply by imitating the corporate insiders.

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