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 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 seven consumer discretionary stocks made the list:
|
Security |
Net Number of Buys |
Number of Shares Bought |
Total Value |
Market Cap ($million) |
|---|---|---|---|---|
|
Sealy |
3 |
2,011,130 |
$2,840,000 |
$247 |
|
Overstock.com |
1 |
22,500 |
$308,000 |
$368 |
|
Meritage Homes |
1 |
10,000 |
$218,000 |
$767 |
|
Dollar General |
1 |
6,000 |
$194,000 |
$11,657 |
|
Stage Stores |
12 |
9,404 |
$78,000 |
$630 |
|
AutoNation |
2 |
1,349 |
$43,000 |
$5,811 |
|
Perry Ellis International |
4 |
7,375 |
$15,000 |
$350 |
Source: Capital IQ, a division of Standard & Poor's, as of July 7, 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 Sealy made three open-market purchases worth a total of $2.84 million, while insiders at Perry Ellis International spent just $15,000 on four open-market buys. Both are bullish signs, but the Sealy 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 a free My Watchlist feature. You can get up-to-date news and analysis by adding companies to your Watchlist now:
