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 eight health-care provider stocks made the list:
Net No. of Buys
No. of Shares Bought
Market Cap (in millions)
|MEDNAX (NYSE: MD )||1||50,000||$3,280,000||$3,187|
|ExamWorks Group (NYSE: EXAM )||10||119,300||$1,160,000||$517|
|Brookdale Senior Living (NYSE: BKD )||10||414,114||$440,000||$1,828|
|Tenet Healthcare (NYSE: THC )||1||30,000||$144,000||$2,420|
|Aetna (NYSE: AET )||1||2,575||$100,000||$14,122|
|National HealthCare (AMEX: NHC )||2||3,000||$97,000||$457|
|PSS World Medical (Nasdaq: PSSI )||1||3,000||$68,000||$1,234|
|Health Management Associates||2||4,500||$32,000||$1,952|
Source: Capital IQ, a division of Standard & Poor's, as of Aug. 17.
When it comes to the number and total value of insider open-market buys, more can be better; I've sorted this table accordingly. An insider at MEDNAX, which offers pediatric subspecialty and anesthesia physician services in the U.S. and Puerto Rico, made an open-market purchase worth a whopping $3,280,000. In contrast, Health Management Associates insiders spent a more modest $32,000 combined on open-market buys. Both are bullish signs, but the MEDNAX purchase looks much more promising.
MEDNAX plunged earlier this year after revenue growth disappointed investors, but both analysts and Foolish CAPS All-Stars give the stock favorable ratings. In contrast, ExamWorks gets little attention from Foolish readers and poor ratings from the Motley Fool's CAPS community, but ranked No. 2 on our list with 10 insider buys worth a total of $1,160,000. Its stock dropped 30% earlier this month on disappointing earnings.
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: