Insider buying can be a bullish indicator for a stock and provides another piece of information for investors to weigh when doing 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 some of the largest insider purchases in search of opportunities with this often-positive indicator.
Company Name | Market Cap | Number of Shares Purchased | Value Shares Purchased | CAPS Rating |
|---|---|---|---|---|
| MannKind | $1.20 billion | 700,000 | $6.10 million | ** |
Lawson Software | $1.50 billion | 689,200 | $5.98 million | **** |
| Lions Gate Entertainment | $877 million | 819,823 | $5.33 million | *** |
| Hain Celestial | $1.15 billion | 86,600 | $2.27 million | *** |
Sources: Barron's, Motley Fool CAPS.
The theme for this week's update is repeat purchases and the resurgence of activist investors such as Carl Icahn.
Alfred Mann, founder and CEO of biotech MannKind, bought more shares of the company in advance of the FDA making a decision on the company's diabetes drug, Afrezza. MannKind's stock was down sharply this morning on news that the FDA wanted more clinical trials before approving the drug.
Icahn bought more shares of enterprise software provider Lawson Software, taking his stake in the company above 10%. He made his purchases following Lawson's disappointing earnings report, which gave him a chance to buy shares at a cheaper price. Icahn's investment funds also made more purchases of natural foods provider Hain Celestial, where he owns nearly 16% of the company's outstanding shares.
Lions Gate Entertainment director Mark Rachesky bought shares in the company for $6.50 per share. Rachesky is the company's second-largest shareholder behind Icahn. When Icahn attempted to take control of the company, Rachesky supported Lions Gate management.
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. To learn more about stocks The Motley Fool is buying, click here to receive a free report: "5 Stocks The Motley Fool Owns -- And You Should Too."
