Seeking Alpha
Newsletter provider, fund holdings, insider ownership
Profile| Send Message|
( followers)  

Our past studies have shown that corporate insiders have an edge over ordinary investors, especially when it comes to purchasing stocks. Even small insider purchases are marginally profitable. Insider sales, on the other hand, had not outperformed the market. The reason is simple. Insider sales are often motivated by diversification or liquidity needs, while insider purchases are not. Insiders usually have lots of exposure to their company's performance. They will only increase the exposure when they believe that their purchases have a high probability of being profitable. Academic research shows that insider purchases on average beat the market in the following 12-month period.

Below we compiled a list of large cap stocks that insiders are bullish about right now. All companies have over $2 billion market cap and were purchased by at least one insider over the past week.

Ticker

Company

Insiders

VTR

Ventas Inc.

1

VHI

Valhi, Inc.

1

SUG

Southern Union Co.

3

SHLD

Sears Holdings Corporation

1

GCI

Gannett Co., Inc.

1

WES

Western Gas Partners LP

1

KRO

Kronos Worldwide Inc.

1

INCY

Incyte Corporation

2

Ventas Inc.: Ventas Inc is a real estate investment trust. It has a portfolio of seniors housing and healthcare properties in the United States and Canada. During the past week, one insider of the company bought the stock. On January 18, Director at Ventas, Richard Gilchrist purchased 2200 shares at $55.429 and another 300 shares at $55.43. Now VTR is trading at $56.42 per share, up $1 from the prices at which Gilchrist purchased. VTR has a market cap of $16.3B and a P/E ratio of 49.93. For the third quarter of 2011, the company reported net income of $103 million, up from $57 million for the same quarter a year earlier. During the third quarter of 2011, Israel Englander's Millennium Management increased its VTR stakes by 54% to $29 million. Cliff Asness' AQR Capital Management also had $17 million invested in VTR at the end of September.

Southern Union Co.: Southern Union gathers, processes, transports, stores and distributes natural gas in the United States. For the third quarter last year, the company reported net income of $58 million, up from $37 million for the same period a year earlier. SUG was purchased by three insiders during the past week. On January 13, George Lindermann, director at Southern Union, bought 416 shares at $42.56. On the same day, Richard Marshall and Robert Hack also purchased 42 shares and 31 shares respectively at the same price. Now SUG is trading at $43.35 per share. It has a market cap of $5.4B and a P/E ratio of 21.52. As of September 30, 2011, there are 33 hedge funds with SUG positions. For example, John Paulson's Paulson & Co had $173 million invested in SUG at the end of the third quarter.

Valhi Inc.: Valhi operates in three business segments: chemicals, component products and waste management. It reported net income of $72 million for the third quarter of 2011, up from $14 million for the same quarter of 2010. During the past week, VHI was purchased by one insider. Director of Valhi, Harold Simmons, bought 2000 shares at $59.9 on January 19 and another 2000 shares at $59.75 on January 12. Simmons also bought more than 10000 shares in December last year at prices ranging from $52.75 to $60.75 per share. VHI is now trading at $57.39 per share, within the range of Simmons' purchase price. So it seems that investors can still benefit from purchasing the stock right now. VHI has a market cap of $6.6B and a P/E ratio of 37.23. Murray Stahl's Horizon Asset Management had $13 million invested in VHI. Jim Simons' Renaissance Technologies also had $1.8 million invested in this stock at the end of September.

Insiders are also bullish about Sears Holdings Corporation, Gannett Co. Inc., Western Gas Partners LP,, Kronos Worldwide Inc., and Incyte Corporation. Our past research has shown that investors are able to outperform the market in the long term simply by imitating the purchases of corporate insiders. We encourage investors to focus on the stocks insiders are buying and may consider purchasing some of these stocks for their own portfolios.

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

Source: 8 Stocks With Insider Purchases Over The Past Week