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 often have significant exposure to the company's stock through options or restricted shares that are part of their compensation. 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 will 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 two media stocks made the list:
|
Security
|
Net Number of Buys
|
No. of Shares Bought
|
Total Value
|
Market Cap (millions)
|
| MDC Partners (Nasdaq: MDCA ) |
6 |
21,350 |
$391,000 |
$510 |
| The Interpublic Group of Companies (NYSE: IPG ) |
2 |
11,200 |
$102,000 |
$4,005 |
Source: Capital IQ, a division of Standard & Poor's, as of Aug. 5.
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 MDC Partners made six open-market purchases worth $391,000 while two insider buys at The Interpublic Group of Companies were worth a total of $102,000. Both are bullish signs, but the MDC Partners purchase looks more promising.
MDC Partners is also the only repeat from when I ran the screen on June 30. Six stocks made the list then, including Lions Gate Entertainment (NYSE: LGF ) , which is perhaps best known for its Mad Men hit series. The total value of insider buys on the June 30 screen ranged from $5,000 at Nexstar Broadcasting Group (Nasdaq: NXST ) to a whopping $1,150,000 at Pandora Media (NYSE: P ) .
What's more, I ran the screen at the end of July and not one stock made the list. That means the insider buys that made the screen this time were purchased in the first week of August ... in market conditions that did not inspire general confidence.
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:
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