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Corporate insiders have material non-public information. Trade on such information is illegal, but there are still some insiders acting directly on material non-public information. Investors can benefit from material non-public information simply by imitating the insiders. The insiders who trade illegally may be caught one day, but investors who follow them will be free. Furthermore, even if insiders do not trade on material non-public information, they still have an edge over ordinary investors because they always understand their companies much better than ordinary investors.

In this article, we are going to focus on the stocks that insiders and Israel Englander are bullish about. Englander is the founder of Millennium Management. Englander started Millennium with $35 million in 1989. The fund returned 17% annually and grew to $8 billion by 2005. Today, Englander is one of the top paid fund managers. He is the 651st richest person in the world as of September 2011, according to Forbes. During the past year, Millennium International Ltd was up 7.46% through December 22.

Below we compiled a list of stocks both Englander and insiders are bullish about. All stocks were purchased by at least one insider over the past month and Millennium Management reported to own at least $10 million of these positions.

Company Name

Ticker

Value

Insiders

APACHE CORP

(NYSE:APA)

36954

1

ARCH COAL INC

(NYSE:ACI)

30664

1

E Q T CORP

(NYSE:EQT)

16032

3

AMAG PHARMA

(NASDAQ:AMAG)

15657

1

N I I HOLDINGS INC

(NASDAQ:NIHD)

14705

3

WELLS FARGO & CO

(NYSE:WFC)

14182

1

ALCOA INC

(NYSE:AA)

13932

1

LYONDELLBASELL

(NYSE:LYB)

11563

1

SUNRISE SENIOR LIVING

(SRZ)

10233

1

The largest position with an insider purchase in Englander's portfolio is Apache Corp . During the third quarter, Millennium largely boosted its position in APA by 407%. As of September 30, 2011, the fund reported to own $37 million worth of APA shares. The stock was up 17.71% so far since the end of the third quarter, versus 15.18% for SPY in the same period. APA was also purchased by one insider during the past month. On December 20, William Montgomery bought 2000 shares at $88.715 per share. Now APA is trading at $92.42 per share. It has a market cap of $36.2B and a low P/E ratio of 9.16. At the end of September, there are 30 hedge funds with APA positions. For example, Ric Dillon's Diamond Hill Capital had $136 million invested in APA.

One mega-cap stock that both Englander and insiders are bullish about is Wells Fargo & Co . At the end of the third quarter, Millennium disclosed owning $14.2 million worth of WFC stocks, up 48% from the end of June. The stock was also purchased by one insider over the past month. On December 28, John Baker bought 662 shares at $27.2599, 66 shares at $27.26, and another 248 shares at $27.2999. Today WFC is trading at $29.55 per share. It has a market cap of $146B and a relatively low P/E ratio of 10.97. WFC is very popular among hedge funds as well. There are 69 hedge funds reported to own WFC in their 13F portfolios at the end of the third quarter. Among them, Warren Buffett's Berkshire Hathaway had the largest WFC position. The fund invested $8.7 billion in WFC at the end of September. Since then, WFC returned 23.38%, beating the market by more than 8 percentage points.

Other large-cap stocks that both Englander and insiders love include LyondellBasell Industries NV , Alcoa Inc , EQT Corporation , NII Holdings Inc , and Arch Coal Inc. Our past studies have shown that insider purchases on average outperform the market over the next 12-month period. We believe that investors will be more likely to beat the market in the long term by focusing on the stocks that both insiders and famous hedge fund manager Israel Englander are in favor of.

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

Source: Israel Englander's Stock Picks With Insider Purchases