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Our small-cap hedge fund strategy beat the market by 44 percentage points since its inception 18 months ago. Visit our website to learn how you can do the same. Insider Monkey is a finance website that provides free hedge fund and insider trading data. We believe ordinary investors can beat the... More
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  • One Stock Insiders Are Buying Like Crazy 0 comments
    Jan 3, 2011 10:57 AM | about stocks: DELL, KOSS, API, ZOLT, TCX, HTGC
    Insider trading has been a very profitable investment strategy for a very long time. Academic studies going back to 1968 have shown that insider purchases have returned better than index funds following S&P 500 index. These results are not unique to US markets either. In several European markets insiders magically manage to beat the market indices as well. We’ve been publishing the lists of such companies for the past four weeks. The stocks that insiders bought like crazy managed to beat the market during the first three weeks. Last week we listed five stocks with blizzard like insider purchases. Here is how those 5 stocks performed:

    1. Dell Inc (NASDAQ:DELL): Michael Dell spent $100 million and bought 7.4 million shares at $13.57.  Dell stock lost 1.7% since last Friday, underperforming the S&P 500 index which increased by 0.1%.

    2. Koss Corp (NASDAQ:KOSS): Koss went up by 0.4% including the dividend, slightly outperforming the market.

    3. Advanced Photonix Inc. (NYSEMKT:API): Advanced Photonix increased by 3.2% during the past week. It was up by more than 20% on Tuesday with relatively heavy volumes but the price came down later.

    4. Zoltek Companies Inc. (NASDAQ:ZOLT): Zoltek advanced 1.7% during the past 5 trading days, beating the market by 1.6 percentage points.

    5. Tucows Inc (NASDAQ:TCX): Tucows went down by 6.4% during the past week. Luckily we said “this is also a very illiquid stock, and we will be staying away from this one.”

    Overall three of the five stocks bought by insiders managed to beat the market again. Excluding Tucows Inc (we have been excluding the stocks we said we will be staying away) the average return of these stocks was 0.8%, beating the S&P 500 index by 0.7 percentage points. During the past four weeks, 16 out of 21 stocks we mentioned managed to beat the S&P 500 index.

    Here are this week’s only stock insiders are buying like crazy:

    Hercules Technology Growth Capital Inc (NYSE:HTGC): The bulk of the insider purchases at HTGC made at the end of November below $10. The stock closed at $10.36 on Friday, 1% below the latest insider’s transaction price.



    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Stocks: DELL, KOSS, API, ZOLT, TCX, HTGC
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