Insider buying can be a bullish indicator for a stock and provides another piece of information for investors to weigh when doing investment research. Company executives, board members, and shareholders with stakes exceeding 10% must notify the Securities and Exchange Commission within two days of their share purchases (and sales) in a Form 4 filing. Each week, I take a look at the largest insider purchases in search of investing opportunities with this often positive indicator.
|
Company Name |
Market Cap |
No. Shares Purchased |
Value Shares Purchased |
CAPS Rating (out of 5) |
|---|---|---|---|---|
|
Citigroup
|
$118.8 billion |
542,198 |
$2.33 million |
*** |
|
General Motors |
$50.7 billion |
39,150 |
$1.32 million |
* |
|
MBIA
|
$2.09 billion |
100,000 |
$1.00 million |
* |
Source: Barron's and Motley Fool CAPS.
Citigroup consumer banking head Manuel Medina-Mora bought shares of the company for a weighted average of $4.30 per share. Mora's purchase was 15% below Citigroup's 52-week high, but above where shares closed last week. Over the past 12 months, more than half of Citigroup's revenues and 94% of its profits have been generated outside North America. As CEO of Citigroup's Latin American and Mexican operations, Mora would have insight into future prospects for an important piece of Citigroup's global presence.
A host of directors and officers of GM bought shares of the company the week after it re-emerged as a public company following its bankruptcy. CEO Dan Akerson and Chairman and former CEO Ed Whitacre each invested approximately $500,000 in GM stock, while several other officers and directors bought far smaller quantities.
Joseph Brown, the CEO of bond insurer MBIA, bought $1 million of the stock at $10 per share. The company's shares are trading at a small fraction of their pre-financial-crisis value. Clearly, Brown doesn't expect the company to go the way of recently bankrupt Ambac, and he is not alone in his assessment. Well-regarded investors such as Bruce Berkowitz and George Soros added to their stakes in the company during the third quarter.
While Fools should always do their own due diligence, and not blindly follow the insiders, insider buying can point to good places to look for opportunities. To learn more about the stocks The Motley Fool is buying, click here to download a free report, 5 Stocks The Motley Fool Owns -- and You Should, Too.
