Successful investing is about concentrating on the factors that really count.

For us Fools, few things are more important than finding honest management teams with a whole lot -- their reputations, their careers, and, preferably, a boatload of common stock -- riding on the success of the business. Looking for high levels of insider ownership in particular makes sense for a few reasons:

  • Insiders have a better sense of the prospects for their business and industry, so a high ownership stake is often a very positive signal.

Partners for profit
After all, billionaires such as Bill Gates and Warren Buffett got to where they are today by betting on their own companies. And by winning their bet, they've made millionaires out of thousands of investors in the process.

So, with the goal of finding real insider-partners to go into business with, here are seven top stocks from our Motley Fool CAPS community. In addition to having insider ownership that exceeds 15%, these stocks have received a four- or five-star rating (out of five) in our database:


% Owned by Insiders

Key Shareholder  

CAPS Rating

AeroVironment (NASDAQ:AVAV)




Arcelor Mittal (NYSE:MT)




Dorman Products (NASDAQ:DORM)








Kinetic Concepts


Founder/Chairman Emeritus


Guidance Software (NASDAQ:GUID)




TBS International (NASDAQ:TBSI)




Data from Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

As always, don't view these stocks as formal recommendations. There are still plenty of risks involved with heavy insider ownership -- like the relative inability of outside, dissident shareholders to spur changes -- so due diligence is very much required.

The man of steel         
Some peoples' names are just synonymous with certain industries. With software, you think of Bill Gates. With digital anything, you think of Steve Jobs. With educating, amusing, and enriching, you think of two razor-sharp jesters named Tom and David Gardner. And with steel, you think of, uh ... well, maybe it's not so obvious with steel.

But it should be. Because when it comes to the world of steel, one man just seems to have it in the palm of his hands right now: Lakshmi Mittal, the current president and CEO of Netherlands-based steel producer Arcelor Mittal. He founded Mittal Steel back in 1997 and has led the business ever since. Specifically, Mittal is often regarded as the lead consolidator of the global steel industry.

Of course, Mittal's most significant and widely heralded move to date was the purchase of Arcelor of Luxembourg last year -- a merger that effectively created the world's largest steel company. Fools know size isn't all that matters, but in the steel business (or any other commodity, for that matter), your best bet is often to go with the biggest.  

By creating this two-headed monster of a steel company, Mittal obtained market share, global reach, and cost advantages that are the envy (for the moment, anyway) of the industry. Arcelor Mittal now has operations in more than 60 countries, is the leader in all major global markets, and produces roughly three times the amount of steel as its next largest competitor.

For the first half of 2007, Arcelor generated a whopping $51.7 billion in sales and $5 billion in net income. In Mittal's own words, "The company has made excellent progress in effecting a successful integration and is well positioned for the future."

To be sure, it would still be small-f foolish not to at least consider other steely stalwarts such as POSCO (NYSE:PKX) and Gerdau (NYSE:GGB) -- both five-star steel producers that also stand to benefit from huge global growth. But when the visionary running your business owns 45% of the shares, was named Man of the Year by the Financial Times in 2006, and has a 30-year track record of success -- as is the case with Lakshmi Mittal -- it's tough not to give Arcelor the insider's edge.  

Now, here's a real inside look at CAPS ...

  • NetscribeManufac breaks Arcelor down by segment: "Company is witnessing strong and underlying demand in China. Profitability of Flat Carbon Americas division, Long Carbon Americas and Europe, and AACIS is expected to improve due to increase in volume and strong market conditions. It seems as if nothing is going to stop this company from getting larger."
  • CAPS All-Star jester112358 is also a fan of the iron man: "Very good value and growth stock. Recent stock buyback is another driver for stock appreciation. The best aspect of this company, which is in my real portfolio, is the terrific management. One of the most cost efficient steel producers."
  • And finally, CAPS All-Star NateWonder leaves us with an interesting comparison: "They are the largest steelmaker in the world and they still see buying opportunities. Acquired plants in India and China which will help top-line growth and hopefully bottom-line growth. They are becoming the Wal-Mart of steel."

Now get inside, Fool
Buying a stock means becoming part-owner of that business. When the people you've essentially hired to run your company are also owners, the odds of profiting from their decisions increases dramatically. Remember: Finding dedicated partners is still the secret to outsized returns.

To get the inside scoop on the ideas mentioned above, or to find even more stocks with high insider ownership, join Motley Fool CAPS today. It's 100% free -- an insider's deal if I ever saw one.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. POSCO is an Income Investor recommendation. The Fool has a disclosure policy.