Insider buying can be a bullish indicator for a stock and provides another piece of information for investors to weigh when doing investment research. Company executives, board members, and shareholders with stakes exceeding 10% must notify the SEC within two days of their share purchases (and sales) in a Form 4 filing. Each week, I take a look at the largest insider purchases in search of investing opportunities with this often positive indicator.
|
Company |
Market Cap |
No. Shares Purchased |
Value of Shares Purchased |
CAPS Rating
|
|---|---|---|---|---|
|
Star Scientific |
$206 million |
779,220 |
$1.49 million |
* |
|
Skilled Healthcare Group
|
$238 million |
219,500 |
$1.15 million |
*** |
|
Charter Communications |
$4.11 billion |
30,000 |
$1.08 million |
N/A |
|
Bank of America
|
$121.6 billion |
69,500 |
$870,000 |
*** |
|
Digital Realty Trust
|
$4.73 billion |
15,000 |
$819,000 |
* |
Sources: Barron's; Motley Fool CAPS.
The CEO, COO, and two directors of Star Scientific participated in a recent equity offering, paying $1.925 per equity unit, which consists of a share of common stock and a warrant. The company has submitted an application to the FDA to have its smokeless tobacco product labeled a "modified risk tobacco product." The company claims that its proprietary technology reduces levels of cancer-causing toxins.
Several officers and directors of Skilled Healthcare Group bought shares at price points ranging from $5.19 to $6.00 per share. The company, which operates assisted-living, rehabilitation, and hospice-care facilities, reported earnings earlier this month that beat expectations and it also raised its estimates. Since then, its stock has soared 60%. In September, the company settled a lawsuit over staffing at its California facilities. With the lawsuit settled and revenues and earnings on the rise, company executives must feel more positive about the future.
Two Bank of America board members bought shares in the company at prices ranging from $12.45 to $12.62 per share. The company's stock price is down nearly 40% since it hit its high for the year in April. Concerns over the company's exposure to potential mortgage putbacks have been weighing on the stock.
Charter Communications' CFO bought shares at a weighted average price of $35.83, following the company's third-quarter earnings report. The cable operator filed for bankruptcy protection in 2009 but re-emerged as a public company later that year with a slimmed-down balance sheet. During the third quarter, Charter grew its digital cable, Internet, and phone subscribers, but lost basic cable subscribers.
A board member of Digital Realty Trust, a REIT specializing in corporate datacenters, bought shares at a weighted average price of $54.59 per share. The REIT's stock price fell 4.7% on Nov. 4 following its third-quarter earnings report.
While Fools should always do their own due diligence, and not blindly follow the insiders, insider buying can point to good places to look for opportunities. For more on the companies mentioned, see:
