Studies show that, statistically, stocks bought by insiders beat the S&P index. Of course, not every stock meeting this criteria beats the market and no investor can buy shares in every single one of these companies in any case. As a result, even investors who are interested in following insider trading activity have to review filings as they come up to see if the stocks make sense in terms of value as well. Here are five stocks that insiders bought recently:
$730 million market cap registry services company Web.com Group, Inc. (NASDAQ:WWWW), had two Board members buy the stock on December 13th at about $14 per share. Consensus insider purchases, it turns out, are a particularly bullish signal on average. Web.com’s revenues have been rising rapidly, but so have costs and the result last quarter was a larger operating loss than in Q3 2011. Columbus Circle Investors, managed by Donald Chiboucis, had not owned the stock at the beginning of July but bought 840,000 shares over the course of the third quarter (see more stock picks from Columbus Circle Investors). However, the stock is a popular short with over 30% of the outstanding shares held short as of the most recent data. Web.com’s growth- and fairly cheap valuation, in terms of expected 2013 earnings- have our attention, but we think it’s more of a “watch list” pick at the moment due to the operating losses. See more of our thoughts on Web.com.
A member of the Board of Directors at another Internet company, ValueClick Inc (NASDAQ:VCLK), bought 3,500 shares through his retirement accounts (and his spouse’s retirement account also bought shares) at prices of around $19.40. ValueClick’s revenue and earnings have been up; though comparisons to a year ago aren’t quite fair as the company has been acquisitive, earnings per share also seem to have been increasing over the course of 2012. At 17 times trailing earnings, the marketing services, media, and content provider seems to be priced about even with its peers. Read our analysis of ValueClick.
Multiple insiders, including the CEO, have been buying Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS), a services and technology solutions company serving military, intelligence, and public safety customers. Kratos’s market capitalization is only $280 million, but with an average of 360,000 shares traded daily and a stock price of about $4.90 we think there is sufficient dollar volume for most investors. Revenue was up 34% last quarter versus a year earlier, but the company is unprofitable and the sell-side expects only a small amount of earnings next year. Kratos also has a high debt load and moderate short interest.
The CEO of Bruker Corporation (NASDAQ:BRKR) had bought 50,000 shares in early December and recently bought another 50,000 shares at an average price of $14.68. See a history of the CEO’s insider purchases. Bruker is a $2.6 billion market cap scientific instruments and materials company. It trades at 25 times trailing earnings, but has been reporting good growth and analysts expect that will continue. Still, the forward P/E of 17 would require further growth after that point to justify the current valuation. Value investor Joel Greenblatt was buying Bruker during the third quarter of 2012 (check out more stocks Greenblatt was buying).
Kenneth Masick, a Board member at retail focused REIT Retail Properties of America Inc (NYSE:RPAI), bought 4,700 shares on December 14th at an average price of $11.92 per share. Funds from operations increased 24% in its most recent quarter compared to the same period in the previous year. Compared to other retail REITs, Retail Properties of America offers a high dividend yield; at current prices, and going by recent payments, the annual yield is 5.6%. Simon Property Group (NYSE:SPG) pays a yield of about 3% and other peers that we looked at ranged from about that level to a bit above 4%. Retail Properties of America is a recent IPO, and has a smaller market cap than many peers, and of course is exposed to the broader economy, but has at least something of a case as an income stock.
