Last Week's Notable Insider Purchases

by: Insider Monkey

Academic research has shown that corporate insiders have an edge over ordinary investors when it comes to purchasing stocks. On the other hand, insider sales had not outperformed the market as they are usually motivated by diversification or liquidity needs. Even small insider purchases are marginally profitable. The reason is simple. Insiders usually have a lot of exposure to their company's performance. It does not make sense for them to increase their exposure unless they believe that their purchases have a high probability of being profitable. That's why we have been tracking insiders and recommending investors to focus on their purchases.

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 last week.





Associated Banc-Corp



E. I. du Pont de Nemours and Company



Icahn Enterprises, L.P.






Kronos Worldwide Inc.



NII Holdings Inc.



Reliance Steel & Aluminum Co.



Valhi, Inc.



U.S. Bancorp


US Bancorp was purchased by two insiders last week. On January 27, Joseph Hoesley, vice chairman at USB, purchased 1,500 shares at $25.55. Lee Mitau, EVP and General Counsel at USB, also bought 1,500 shares at $25.35 on January 24. These may seem to be small transactions but academic studies have shown that insider purchases as small as 100 shares outperformed the market historically. Having two insiders purchase at around the same time is also another strong indicator of perceived undervaluation in the stock. USB is already trading at $28.56, outperforming the market since the insider purchases. It has a market cap of $55B and a relatively low P/E ratio of 11.6. US Bancorp recently disclosed its fourth quarter net income of $1.4 billion in 2011, up from $1.3 billion for the same quarter a year ago. USB is also quite popular among hedge funds. At the end of the third quarter, there were 36 hedge funds with USB positions in their 13F portfolios. For example, Warren Buffett is the most bullish fund manager about USB. His Berkshire Hathaway had $1.6 billion invested in USB. Andreas Halvorsen, Lee Ainslie and Ric Dillon are also bullish about the stock.

Another large-cap stock with insider purchases over the past week is E. I. du Pont de Nemours and Company . On January 26, Bertrand Collomb, director at DuPont, purchased 5290 shares at $51.2003 per share. Now DD is trading at $51.56 per share. The stock has a market cap of $48B and a relatively low P/E ratio of 14. DuPont recently reported annual net income of $3.5 billion in 2011, up from $3.0 billion for 2010. DD is also a popular stock among hedge funds. As of September 30, 2011, there were 33 hedge funds reported to own DD in their 13F portfolios. Billionaire Jim Simons' Renaissance Technologies is bullish about DD. The hedge fund had $61 million invested in DD at the end of the third quarter.

Insiders are also bullish about KeyCorp . It was purchased by one insider during the past week. On January 26, William Gisel, director at KeyCorp, bought 2,600 shares at $7.84 per share. Now KEY is priced at $7.85. It has a market cap of $7.6B and a low P/E ratio of only 8.8. The bank holding company recently reported annual net income of $920 million in 2011, up from $554 million for 2010. At the end of the third quarter, there are 29 hedge funds disclosed to own KEY. Ken Griffin is the most bullish hedge fund manager about KEY. His Citadel Investment Group had $124 million invested in this stock at the end of September. Martin Whitman, Cliff Asness, Israel Englander and Steven Cohen are also bullish about KEY.

Other stocks insiders are bullish right now include Associated Banc-Corp, Icahn Enterprises LP, Kronos Worldwide Inc, NII Holdings Inc, Reliance Steel & Aluminum Co and Valhi Inc. According to our past studies, insider purchases on average outperform the market over the next 12-month period. We believe that by imitating the insider purchases, investors will be more likely to beat the market in the long term.

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