6 Media Stocks Insiders Are Buying

When insiders buy shares on the open market, their companies could enjoy bullish times ahead. Corporate insiders often have the inside track on their companies' prospects, and many of them get paid largely in stock options or restricted shares. Besides, insiders probably wouldn't risk plowing too much of their own money into their own company's stock -- reducing their portfolio's diversity, and increasing its risk -- unless they thought the stock might rise.

With that in mind, I screened for companies where at least one insider made an open-market buy in the last 30 days. These six media stocks made the list:

Security

Net Number of Buys

# of Shares Bought

Total Value

Market Cap ($ million)

Pandora Media (NYSE: P  ) 4 99,629,561 $1,150,000 $3,201
Rentrak (Nasdaq: RENT  ) 4 46,756 $250,000 $213
MDC Partners (Nasdaq: MDCA  ) 2 30,000 $160,000 $523
Lions Gate Entertainment (NYSE: LGF  ) 5 64,321 $72,000 $922
PRIMEDIA (NYSE: PRM  ) 1 1,950 $14,000 $316
Nexstar Broadcasting Group (Nasdaq: NXST  ) 1 750 $5,000 $240

Source: Capital IQ, a division of Standard & Poor's, as of June 30, 2011.

When it comes to the number and total value of insider open market buys, more can be better; I've sorted this table accordingly. Insiders at Pandora Media made four open-market purchases worth a total of $1.15 million, while a Nexstar insider spent just $5,000 on a single open-market buy. Both are bullish signs, but the Pandora purchases look a lot more promising.

Foolish takeaway
Insider buying signals that someone who should be in the know is betting that the stock will rise. You can use this list of recent insider purchases as a starting point for further research -- or a good reason to make a contrarian play.

Are these insiders right? To help you find out, The Motley Fool recently introduced our free My Watchlist feature. Get up-to-date news and analysis by adding companies to your Watchlist now:

Fool contributor Cindy Johnson does not currently own shares of any stock in this story. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On July 05, 2011, at 12:37 PM, SpinningFree wrote:

    Hi Cindy,

    With a few of these - Pandora Media in particular - it looks like these "open market purchases" look mostly like the exercises of call options. 100 millions shares for a little over $1 million doesn't seem to add up the same as an open market purchase at market price, which is in the ~$20 range currently.

    I believe that any insider would take a call option at a small fraction of the market price as in the case of Pandora Media, so this doesn't necessarily translate to a good sign. Am I missing something here?

    Thanks,

    Alex Z.

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