In a victory for common sense, the trading behavior of company executives, directors, and large shareholders in the stocks of firms they're registered "insiders" at have been proven profitable to monitor by both academic studies and (more importantly) the experience of professional investors.
Below are lists of the top 10 mainly open-market insider purchases and sales filed at the Securities and Exchange Commission Tuesday, July 24, 2012 as ranked by dollar value.
Please note, however, that these are factual lists, not buy and sell recommendations. Dollar value is only one metric to assess the importance of an insider transaction, and, frankly, often not even the most important metric that determines if an insider transaction is significant.
Today's Top Buys, however, contain several significant insider signals. Third Point's Daniel Loeb is speaking positively about Yahoo! (YHOO) via his pocketbook instead of negatively and loudly any way he can as he often does. While the $39.4 million more his firm is investing increases his stake by just 3.5%, one could imagine this oftentimes gruff activist dumping shares instead at this point, if he did not approve of Yahoo!'s new CEO. The fact that Director Michael Wolf increased his stake by a much larger 67.6% with his just filed $380k purchase of YHOO adds significance to the insider profile of this company in transition.
In a good market, an insider buying cluster that includes Mr. Loeb could be expected to move a stock a bit higher on it own. We still don't see an imminent change in Yahoo!'s fundamental prospects, however, and see no rush to follow insiders into YHOO. Reasonable minds may differ.
Big-time investor Kevin Douglas continues to be a busy buyer of both Westport Innovations (WPRT) and Imax (IMAX). We first rated this stock a buy back in February 2010. We've also already taken one round of profits in this big winner, but again have a full position in the stock as we bet its recent pullback represents another buying opportunity. Mr. Douglas obviously concurs.
Imax has popped on the list of significantly insider bought stocks to consider going long for several weeks now in our Newsletter. Despite our reticence to pay up for 3D effects that add neither plot nor thrill advantages (in our opinion), Imax does appear to have fundamental momentum, and its stock price momentum. It remains under consideration.
We've already bitten, however, on tiny cap Ambassadors Group (EPAX). Recent insider purchases by Bandera Partners and Peter Kamin (a co-founder of renowned value shop, ValueAct Capital) in what is usually a quiet period for firms has us intrigued. The fact that Director Kamin has been buying in July seems to indicate that Ambassadors does not have the usual trading window restrictions in place for its insiders. The company releases its Q2 after the bell today (July 25th), and Bandera (deemed an insider only by virtue of its large holdings) seems to think the quarter won't disappoint.
But we think these insiders are more focused on EPAX's remarkable value metrics, and wouldn't risk the legal ramifications of such obvious front running of a bonzo quarter. Despite EPAX's seeming value, however, any stock this small has to be considered a high-risk prospect.
(Author's Note: Follow InsiderInsights to be notified about our daily "Top Insider Trades" Instablog Post.)
| #: | FILER NAME | INSIDER TITLES | COMPANY NAME | TICKER | TRANS TYPE | DOLLAR VALUE |
|---|---|---|---|---|---|---|
| 1 | Loeb Daniel S | DIR | Yahoo | YHOO | B | $39,429,400 |
| 2 | Icahn Carl C | BO | Navistar International | NAV | B | $15,751,189 |
| 3 | Domain Partners VIII | BO | Durata Therapeutics | DRTX | JB* | $7,006,824 |
| 4 | Douglas Kevin | BO | Westport Innovations | WPRT | B | $5,466,890 |
| 5 | Douglas Kevin | BO | IMAX | IMAX | B | $2,440,000 |
| 6 | McCarthy Kent C | BO | China Cord Blood | CO | B | $815,750 |
| 7 | Edwards Stephen F | CB,DIR | COSI | COSI | JB* | $600,001 |
| 8 | Stutz Carin | CEO,PR,DIR | COSI | COSI | JB* | $500,000 |
| 9 | Bandera Partners | BO | Ambassadors | EPAX | B | $387,288 |
| 10 | Wolf Michael J | DIR | Yahoo | YHOO | B | $380,030 |
Source: InsiderInsights.com | Key to Insider Title and Trans Type Codes
| #: | FILER NAME | INSIDER TITLES | COMPANY NAME | TICKER | TRANS TYPE | DOLLAR VALUE |
|---|---|---|---|---|---|---|
| 1 | Stryker Ronda E | DIR | Stryker | SYK | AS | $1,373,184 |
| 2 | Tarvin Michael E | VP | Select Medical | SEM | AS | $1,115,315 |
| 3 | Schmidt Neal J | VP | Platinum Underwriters | PTP | S | $912,185 |
| 4 | George Roger E | VP,LO,GC | Align Technology | ALGN | S | $678,597 |
| 5 | Palette Donald W | VP,CFO | Skyworks Solutions | SWKS | S | $460,960 |
| 6 | Lawther Krill Katherine | PR,CEO,DIR | ANN | ANN | AS | $398,777 |
| 7 | Greenhill & Co | O | Iridium Comms | IRDM | AS | $360,164 |
| 8 | Ryan Paul R | PR,CEO | Acacia Research | ACTG | AS | $289,208 |
| 9 | Lee Dooyong | VP | Acacia Research | ACTG | AS | $289,208 |
| 10 | Athene | BO | Apollo Comml RE Fin | ARI | S | $289,180 |
Source: InsiderInsights.com | Key to Insider Title and Trans Type Codes
Additional disclosure: Additional disclosure: Clients of Insider Asset Management also own WPRT and EPAX.
