Insider buying in the open market is generally considered a bullish indicator. Corporate insiders often have the inside track on the company's prospects. What's more, their income is typically closely tied to their company's prospects, so purchases are especially intriguing if the insider is bullish enough to ignore the desire for more diversification.
What do they know?
While insider selling may indicate nothing more than a college tuition bill coming due, a home remodeling, or a high-end vacation, buying is typically a sign the insider expects the stock to rise. Buying in the open market could be considered more bullish than exercising stock options because the insider found some other way to fund the purchase.
With that in mind, I ran a screen to find companies that have had at least one insider open market buy in the past 30 days. Here are 10 real estate stocks that made the list:
|
Security |
Net Number of Buys^ |
No. of Shares Bought^ |
Total Value^ |
Market Cap |
|---|---|---|---|---|
|
Two Harbors Investment |
16 | 192,300 | $2,050,000 | $941 |
|
Parkway Properties |
5 | 146,561 | $1,350,000 | $356 |
| MFA Financial | 7 | 83,000 | $517,000 | $2,788 |
| Corporate Office Properties Trust | 1 | 7,094 | $268,000 | $2,232 |
|
Sunstone Hotel Investors |
1 | 25,000 | $224,000 | $1,055 |
|
Walter Investment Management |
2 | 10,000 | $170,000 | $453 |
|
Invesco Mortgage Capital |
2 | 7,500 | $170,000 | $1,507 |
| DCT Industrial Trust | 1 | 20,000 | $98,000 | $1,251 |
|
Starwood Property Trust |
1 | 4,200 | $86,000 | $1,449 |
|
Inland Real Estate |
7 | 35,275 | $66,000 | $770 |
Source: Capital IQ, a division of Standard & Poor's, as of 6/17/11.
^Insider open market buys (past 30 days).
When it comes to the number and total value of insider open market buys, more could be considered better. The table is sorted accordingly. For example, there were 16 open market purchases of Two Harbors Investment totaling more than $2 million, compared with one open market purchase of Starwood Property Trust totaling $86,000. Both are bullish signs, but the Two Harbors sign is a much stronger signal.
Foolish takeaway
Insider buying is a sign that someone who should be in the know is betting that the stock is going to rise. You can use this list of open market insider purchases in the past 30 days to generate research ideas and/or reinforce a contrarian view.
Are these insiders right? To help you find out, The Motley Fool recently introduced a free My Watchlist feature. You can get up-to-date news and analysis by adding companies to your Watchlist now:
- Add Two Harbors Investment to My Watchlist.
- Add Parkway Properties to My Watchlist.
- Add Sunstone Hotel Investors to My Watchlist.
- Add Walter Investment Management to My Watchlist.
- Add Invesco Mortgage Capital to My Watchlist.
- Add Starwood Property Trust to My Watchlist.
- Add Inland Real Estate to My Watchlist.
