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
||F. Thomson Leighton, chief scientist||$1.63 million||***|
||Peter Georgescu, director||$535,000||****|
||Ted Collins, director||$658,000||**|
Source: wsj.com, Motley Fool CAPS.
Although following the lead of insiders can be profitable, you'll need to do further due diligence to determine whether any of these stocks would make a good addition to your portfolio. This isn't a list of stocks to sell or buy; just the inside track on companies you might want to check out further.
Get together right now
Akamai Technologies and Riverbed Technology
The two companies are joining forces to have Akamai's software run on Riverbed's network appliance while simultaneously running Riverbed's software on Akamai's servers. The goal is to attract cloud-computing leaders like Amazon.com and Rackspace
The market has beaten up Akamai's stock this year -- it's down 30%. But with its revenue and earnings beating expectations (though its future outlook fell a bit short), it's easy to see why its chief scientist, who likely best understands the potential of the Akamai-Riverbed collaboration, bought up a huge chunk of shares.
CAPS member MikeBobulinski agrees the depressed nature of Akamai's stock supports Leighton's decision to buy: "Looks to be beaten back overly much for an earnings miss that is minor, and a less than stellar outlook in the opinion of the pundits. Looks like a buying opportunity to me."
Let us know on the Akamai Technologies CAPS page if it will be able to recover its footing as quickly as it seems to have lost it.
Revenge of the nerds
If being a nerd is cool, has it lost its cachet? Whatever the merits of that discussion, catering to the geek community is a profitable business for Geeknet, the self-described "online network for the global geek community" that owns important trademarks like Slashdot and ThinkGeek.
As technology has broadened and become more complicated (in its effort to make our lives simpler), we'll probably never outgrow our need for "geeks." That hasn't been lost on businesses like Best Buy
Geeknet is capitalizing on the need for nerds by catering to them rather than the public at large. Revenues last quarter jumped nearly 50% in its e-commerce segment and were up 36% overall, while the company narrowed both GAAP and adjusted EBITDA losses.
Geeknet's one-star CAPS rating suggests members think there are better places for your money, but add it to your watchlist to see if it will exact its revenge.
A transforming event
The swaying palms and blue waters turned into a mirage for Oasis Petroleum, which saw losses widen in its most recent quarter as a result of derivatives-contract losses, despite enjoying strong top-line growth. Oasis has been able to enjoy soaring revenues along with higher production volumes, but its strategy of aggressively hedging its exposure to oil prices kept it from reaping the full benefit of higher oil prices. CAPS member subsurfacemapper predicted earlier this year that the stock would eventually be as welcome as an oasis in the desert:
Oasis is a relatively small, focused oil-heavy exploration and production company. They are concentrated in the Bakken play in N Dakota, they have tremendous acreage position and have two recent 1000 plus bpd wells. I believe they will have more, and that should allow them to pay down their high debt load and flourish from there.
Drill down for further insights on the Oasis Petroleum CAPS page and let us know whether the stock will report a gusher of profits in the future.
The inside track
Following the insiders can be a path to profits; 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 it's worth trading on this inside information.
The Motley Fool owns shares of Best Buy. Motley Fool newsletter services have recommended buying shares of Riverbed Technology, Amazon.com, Akamai Technologies, Rackspace Hosting, Staples, and Best Buy. 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. The Motley Fool has a disclosure policy.