Famed money manager Peter Lynch gave us the inside scoop on how to look at insider transactions. Executives can sell their stock for any reason, he said, but they only buy for one: They think the price is going to go up!
Below we highlight a handful of insiders who have made big purchases of their own company's stock in the past week. These aren't executives getting big chunks of shares from option grants. Rather, they're insiders putting their own money on the line buying shares at market prices. We'll then pair that information with insights from the members of Motley Fool CAPS to see if they think the stock has the same prospects the insiders apparently do.
Market Value of Transactions
||Kase Lawal, chairman||$0.2 million||**|
Enterprise Products Partners
||Randa Williams, director||$634.2 million||*****|
||Alfred Mann, CEO||$5.8 million||**|
Source: wsj.com; Motley Fool CAPS.
Although following the lead of insiders can be profitable, we still recommend you do further due diligence to determine whether these stocks make a good addition to your own portfolio. This isn't a list of stocks to buy, just the inside track on companies you might want to check out further.
An investment in the future
Discussing the development potential of oil and gas fields off the west coast of Africa invariably brings up the names of Vaalco Energy
After purchasing a 60% stake in Nigeria's coastal Oyo field last April, CAMAC partner Eni
To finance the intervention, CAMAC raised money through a $20 million stock offering of 9 million shares at $2.20 each. The market apparently didn't like the terms and sent shares tumbling to a level that its chairman apparently thinks is very cheap. CAMAC's stock is down 35% over the past month and off more than 60% from where it traded a year ago.
CAPS members like ibuonye believe CAMAC will rebound because it's actually producing oil, unlike Hyperdynamics, which is only in the process of getting its equipment in place. The broader CAPS community is a little more circumspect, and nearly 30% believe there are still many risks with this niche player.
You can drill down further on the CAMAC Energy CAPS page and let us know if you think the stock will need an intervention.
With a glut of natural gas still depressing the industry, master limited partnership Enterprise Products Partners is benefitting from the need to transport, process, and store the alt fuel. Last month it started a new natural gas liquids (NGL) fractionator that will separate the liquids into ethane, propane, normal butane, isobutene, and natural gasoline. It typically receives a fee on the volume of NGLs fractionated, and the volumes flowing out of the Barnett shale region these days could provide Enterprise with yet another lucrative stream of revenue.
EPP also added storage capacity that may enable petrochemical companies to produce ethylene at lower costs for shipment to international customers.
Enterprise is the country's largest MLP, ahead of Kinder Morgan Energy Partners
On CAPS, 98% of the nearly 1,100 CAPS members weighing in on EPP believe it will continue to outperform the broad market averages, as apparently does director Williams with that huge bet made on the stock.
Follow along by adding Enterprise Products to your watchlist and having all the Foolish news and analysis aggregated for you.
Put up or shut up
You have to admire someone who's willing to put their money where their mouth is. MannKind's CEO is just such a person as he's been buying up large swaths of his company's stock over the past few months. In fact, he's bought more than $370 million worth of shares over the past six years.
A decision on MannKind's inhaled insulin therapy, Afrezza, had been expected by the end of December, but the FDA delayed a decision for another month. The market spun that as positive news since it didn't outright reject the drug. Yet there remains concern that the agency is heavily risk-averse these days. Mann obviously doesn't agree.
It looks like billionaire founder Alfred Mann is once again funding MannKind with additional capital even though the filing makes it appear like a regular market purchase. The FDA stated last week that it needs an additional four weeks to make a decision about MannKind's inhaled insulin drug called Afrezza. MannKind has spent nearly a billion dollars developing this drug and incidentally the company's market cap is also a billion right now.
Head over to the MannKind CAPS page and let us know what you think about the FDA's delay.
On the inside track
Following the insiders can be a path to profits, but it pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page. Sign up today for the completely free service, and tell us whether its worth trading on this inside information.