Who knows more about a company than anyone else? Its insiders! With that idea in mind, we ran a screen.
We began by screening the drugmakers industry of the healthcare sector for stocks with strong liquidity, those with current ratios above 3. The current ratio is current assets/current liabilities, so ratios above 3 indicate the company has at least 3 times the liquid assets to cover their short-term liabilities.
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.
For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.
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Do you think insiders are calling it right on these names? Use this list as a starting point for your own analysis.
List sorted by net insider purchases as a percent of share float.
1. Horizon Pharma, Inc. (HZNP): Develops and commercializes medicines for the treatment of arthritis, pain, and inflammatory diseases. Market cap at $192.43M, most recent closing price at $5.20. Current ratio at 4.29. Over the last six months, insiders were net buyers of 4,270,210 shares, which represents about 16.85% of the company's 25.35M share float.
2. Pharmacyclics Inc. (PCYC): Operates as a clinical-stage biopharmaceutical company focusing on developing and commercializing small-molecule drugs for the treatment of immune mediated disease and cancer. Market cap at $3.67B, most recent closing price at $54.38. Current ratio at 12.08. Over the last six months, insiders were net buyers of 2,054,434 shares, which represents about 4.55% of the company's 45.18M share float.
3. Endocyte, Inc. (ECYT): Engages in developing targeted therapies for the treatment of cancer and inflammatory diseases. Market cap at $275.61M, most recent closing price at $7.65. Current ratio at 19.8. Over the last six months, insiders were net buyers of 491,100 shares, which represents about 1.99% of the company's 24.71M 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.