Wish you could get an inside peek at your favorite companies? One idea is to consider insider share purchases, which can indicate how those who know the company best view their employer's prospects.
To illustrate, we ran a screen. We began by screening for stocks trading under $5 a share that have outperformed the market over the last quarter, with over 20% quarterly return.
We then screened these names for those with the confidence of their company insiders, such as members of the board and upper management, with significant net insider purchases over the last six months representing at least 2% of share float. Since most companies only have a handful of company insiders, net insider purchases representing 2% of share float is a big show of confidence in their employer's prospects.
Do you think these companies will continue to outperform the market? Use this list as a starting point for your own analysis.
List sorted by net insider purchases over the last six months as a percent of share float.
1. Bluelinx Holdings Inc. (BXC): Distributes building products in North America. Market cap at $166.89M, most recent closing price at $2.56. Performance over the last quarter at 31.66%. Over the last six months, insiders were net buyers of 12,387,050 shares, which represents about 62% of the company's 19.98M share float.
2. EnteroMedics, Inc. (ETRM): Focuses on the design and development of devices that use neuroblocking technology to treat obesity and associated co-morbidities, and other gastrointestinal disorders. Market cap at $115.56M, most recent closing price at $2.89. Performance over the last quarter at 34.55%. Over the last six months, insiders were net buyers of 2,933,271 shares, which represents about 21.29% of the company's 13.78M share float.
3. Crimson Exploration Inc. (CXPO): Engages in the acquisition, exploitation, exploration, and development of natural gas and crude oil properties primarily in East Texas, Southeast Texas, South Texas, Colorado, Mississippi, and Southwest Louisiana. Market cap at $186.54M, most recent closing price at $4.04. Performance over the last quarter at 33.66%. Over the last six months, insiders were net buyers of 650,216 shares, which represents about 3.05% of the company's 21.32M share float.
*Insider data sourced from Yahoo! Finance, all other data sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.