Insiders may sell shares for any number of reasons, but there is really only one reason insiders buy shares of a company — they believe the stock price will move higher and they want to profit from it.
Pullbacks and sell-offs provide a perfect opportunity for investors who have faith in a company to snap up shares. Here are some stocks that have seen insider buying recently.
CVR Energy (NYSE: CVI): Activist investor Carl Icahn recently purchased more than 1.6 million shares, worth over $45 million. This Sugar Land, Tex.-based fuel refiner became a subsidiary of Icahn Enterprises (NASDAQ: IEP) in May and is in the process of being sold.
It has a market cap of $2.1 billion. Though the share price is down more than 8% in the past week, year to date it is more than 29% higher. Despite the recent drop in the share price, the stock has outperformed competitors such as HollyFrontier (NYSE: HFC), as well as the broader markets, over the past six months.
See also: CVR Energy Provides Update on Sale Process
Ferrellgas Partners (NYSE: FGP): Last week, the chief executive purchased more than 31,000 shares, worth more than $360,000. This was his fourth, and largest, purchase of shares this year. This propane distributor recently announced its 71st consecutive $0.50 quarterly distribution.
The Overland Park, Kan.-based company has a dividend yield of 11.9%. Shares fell about 7% in the past month and are down more than 11% year to date. The stock has underperformed the likes of AmeriGas Partners (NYSE: APU) and Suburban Propane (NYSE: SPH) over the past six months.
Frontier Communications (NASDAQ: FTR): Some 50,000 shares, worth more than $177,000, were purchased last week by a director. The CEO, COO and others bought more than 150,000 shares in May. This telecom has a market cap of $3.5 billion. Short interest is about 23% of the float.
Despite a slight rise in the past week, the share price has been falling for the past year and is now nearly 30% lower year to date. The stock has underperformed competitors such as AT&T (NYSE: T) and CenturyLink (NYSE: CTL), as well as the broader markets, over the past six months.
See also: Five Risky Dividend Stocks
Hewlett-Packard (NYSE: HPQ): A director for this Palo Alto, Calif.-based computer hardware maker bought up more than 13.1 million shares in the past two weeks. That was worth more than $295 million. The market cap of this S&P 500 component is $41.6 billion.
An analyst downgrade on Friday sent shares lower by about 6%. The share price is now more than 17% lower than at the beginning of the year. Over the past six months, the stock’s performance has been in line with that of rival Dell (NASDAQ: DELL) but it has underperformed International Business Machines (NYSE: IBM).
See also: Hewlett-Packard Brings in New Head of Software
Opko Health (NYSE: OPK): The chairman continues to periodically buy batches of shares, as he has done since last November. He bought 170,000 shares, worth more than $805,000, in the past week. This Miami-based health care company has a market cap of $1.3 billion. Short interest is 23.7% of the float.
Shares have traded mostly between $4.50 and $5.50 since October, and the share price is more than 7% lower that at the beginning of the year. Over the past six months, the stock has underperformed competitors such as Allergan (NYSE: AGN) and the broader markets.
See also: Blueberries, Gold Bond, Ovaltine and Obesity: The Makings for a Very Good Story
Yahoo! (YHOO): Three directors purchased more than 1.7 million shares of this Sunnyvale, Calif.-tech giant at the end of May. That was worth more than $26.4 million. Yahoo! recently ousted its CEO, and it has just released a Web browser.
This S&P 500 component has a market cap of $18.3 billion and its long-term EPS growth forecast is 14.4%. Shares have traded mostly between $14.50 and $16.50 since October. The stock’s performance has been largely in line with Google’s (NASDAQ: GOOG) over the past six months, but it has underperformed AOL (NYSE: AOL).
See also: Is the Yahoo! and Facebook Battle About to End?
ACTION ITEMS:
Bullish: Investors interested in exchange traded funds focused on insider sentiment might want to consider the following trades:
- Guggenheim Insider Sentiment (NYSE: NFO) is about 2% lower year to date.
- Direxion All Cap Insider Sentiment Shares (NYSE: KNOW) is about 6% lower year to date.
Bearish:
Traders may prefer to consider these alternative positions to some of the stocks listed above:
- AOL (NYSE: AOL) is up more than 81% year to date.
- Cynosure (NASDAQ: CYNO) is up more than 62% year to date.
- Equinix (NASDAQ: EQIX) is up more than 55% year to date.
- Western Refining (NYSE: WNR) is up more than 36% year to date
Note: This article is written by Nelson Hem and published at Benzinga.
