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!
Today, I've highlighted 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. I then paired that information with insights from the members of Motley Fool CAPS to see if they think the stock has the same prospects the insiders do.
Market Value of Transactions
||Brian Goldner, CEO||$0.4 million||*****|
||Joseph Carrabba, director||$0.1 million||**|
||Timothy Sloan, CFO||$0.3 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. So this isn't a list of stocks to buy, just the inside track on companies you might want to check out further.
A toy story
After reporting earnings results that showed profits were down 70% year over year, toymaker Hasbro peeled back about 10% from its recent highs. While Mattel
Hasbro is no longer just a toy company. Like Mattel, it's able to sell toys based on popular movies, Mattel benefited from sales of merchandise tied to Toy Story 3, but in a very big departure, Hasbro is now a content company, too. It produces movies instead of just riding on their coattails, and it's now the joint owner of a TV channel aimed at kids. In many respects, Hasbro is moving closer to Disney
That was the key to Hasbro's results this quarter. Last year it had Transformers and G.I. Joe movies in theaters, which drove sales and profits higher. This quarter there was nothing. Going forward, investors need to keep one eye on movie receipts and another on retail shelf space. Hasbro will need to jealously guard its properties just as keenly as the most adept Monopoly player hoards Boardwalk.
For CAPS member mwlove, the toymaker has a depth of portfolio that will allow it to mine its brands for greater profits:
With movie tie-in products coming in droves in the summer of 2011, Hasbro has income generating machines warming up. Wait and see on the HUB, but the other products line ups are top-notch for the second half of 2011.
Take a ride on the Reading to the Hasbro CAPS page and let us know if it's still a game you want to play.
Profiting at the margins
With gold prices soaring, top-notch miners should excel even if their costs per ounce of gold run a little high. Newmont Mining ran into problems during the ramp-up of its Boddington mine in Australia last year and its costs per ounce ran up higher than expected. Agnico-Eagle Mines
Particularly for Newmont, however, which also displays some fine copper reserves, the weakness its stock displayed recently can easily be surmounted. CAPS member shivan2418 sees some gloomy global prospects driving gold prices even higher:
bankruptcy of several countries
gold is the way to go
A transforming event
Wells Fargo, along with US Bancorp
Berkshire Hathaway's tag team duo gave a ringing endorsement to Wells Fargo at the recent annual meeting, but Glass Lewis and ISS Proxy Advisory Services both recommended voting against a number candidates up for election to the board of directors. In particular, three directors who served on Wachovia's board as it sunk to the brink of failure before being rescued by Wells, were singled out as poor choices.
I always hate betting against a company when the CFO is buying in, and it's hard to argue against Buffett & Cos. endorsement, but do you really want people who oversaw the destruction of a financial institution providing guidance to another banking giant?
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.
Berkshire Hathaway is a Motley Fool Inside Value pick. Berkshire Hathaway, Walt Disney, and Hasbro are Motley Fool Stock Advisor choices. Hasbro is a Motley Fool Income Investor selection. The Fool owns shares of Berkshire Hathaway and Wells Fargo &. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.