When it comes to investing, are you a follower of the bullish activities of others? How about the activities of company insiders and short-sellers?
If so, the following list of 10 stocks may be of interest to you. Each company on our list has experienced significant levels of insider buying and short covering from short-sellers. Furthermore, all names have market caps over $300 million.
If you're curious why these are strong indicators of bullish sentiment, take a moment to review the following before analyzing the final list below.
Short-selling is an investment technique that allows an investor to make money when the value of a stock falls. Short-sellers, however, lose money when the share price rises. Because short-selling requires borrowing, an individual or institution must meet several requirements (including background checks) to engage in short-selling. Thus, in general, short-sellers are more sophisticated than the average investor.
In general: When there is an INCREASE in short-selling, short-sellers seem to think the names will DROP in value. When there is a DECREASE in short-selling, short-sellers seem to think the names will RISE in value. All of the names on this list have experienced a decrease in short selling.
Insider buying: Many analysts follow insider buying trends because, after all, insiders know more about their companies than anyone else. Their investment activity is closely monitored and can tell us a lot about where they feel the business is heading.
Insider buying is represented as a percentage of the share float. Companies experiencing insider buying over the past six months provide an indicator that insiders think the stock is undervalued at current levels. Inversely, insider selling serves as a negative indicator. All of the names on our list have experienced insider buying.
Market capitalization (market cap): Market capitalization, commonly referred to as market cap, is the total market value of a company's outstanding shares. It can be thought of as a measure of company's size. It can be calculated by multiplying the number of shares by the current price of the shares. Companies with higher market cap are considered to have more trustworthy information because they have greater histories of profitability and data.
Insiders and short-sellers think these names are profitable investments. Do you? (Click here to access free, interactive tools to analyze these ideas.)
List compiled by Eben Esterhuizen, CFA:
1. Carmike Cinemas
3. Opko Health
4. Echo Global Logistics
5. Collective Brands
6. Pacific Sunwear of California
7. Pinnacle Financial Partners
8. Synthesis Energy Systems
9. American Superconductor
10. Procera Networks
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Eben Esterhuizen and Rebecca Lipman do not own any of the shares mentioned above. Short data from Yahoo! Finance. Institutional data sourced from Fidelity.
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.