Published November 23, 2012
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.
AGCO (AGCO): One director purchased more than 596,000 shares of this agricultural equipment maker in the past week, worth more than $26 million. AGCO recently said it would boost manufacturing in Brazil and China, and it has a market capitalization of about $4.3 billion. Its return on equity is almost 23 percent and its price-to-earnings (P/E) ratio is less than the industry average. Shares have pulled back almost seven percent in the past month, and the stock has underperformed competitors Deere (DE) and Kubota (KUB) over the past six months.
First Financial Bankshares (FFIN): The chairman and CEO bought almost 133,000 shares of this regional bank recently. That was worth almost $4.7 million. The bank's market cap is about $1.1 billion and its dividend yield is about 2.7 percent. The long-term EPS growth forecast is about 10 percent. Short interest is near 16 percent of the float. Shares are up more than five percent in the past week following an earnings beat. The stock has outperformed the broader markets over the past six months, but it has underperformed competitor Texas Capital Bancshares (TCBI).
MEMC Electronic Materials (WFR): Earlier this week, the CEO purchased more than 83,000 shares, worth more than $200,000. Also, a director scooped up more than 3.2 million shares of this semiconductor company earlier this month. Its market cap is about $600 million. The long-term EPS growth forecast is about 15 percent, but the return on equity is in negative territory and the short interest is about 10% of the float. Shares have popped about 15 percent in the past week but are still more than 36 percent lower year to date. The stock has outperformed Analog Devices (ADI), Broadcom (BRCM) and the broader markets over the past six months.
Navistar (NAV): A director bought 127,000 shares this week. That was worth more than $2.4 million. Activist investor Carl Icahn, also has been periodically buying shares of this truck maker, most recently in late October. Navistar has a market cap of about $1.3 billion. Its long-term earnings per share (EPS) growth forecast is less than nine percent. Short interest is about 19 percent of the float. Shares are down about 48 percent year to date, and the stock has underperformed competitors Oshkosh (OSK) and PACCAR (PCAR) over the past six months.
See also: Navistar Closing Texas Truck Plant
J.C. Penney (JCP): A director bought 126,000 shares last week, which is worth more than $2.0 million. This Plano, Texas-based retailer posted a wider-than-expected third-quarter loss earlier this month. It has a market cap of near $3.8 billion. Short interest is more than 30 percent of the float, and the return on equity in in the red. Shares fell to a multiyear low following the third-quarter report but are up about five percent in the past week, as well as up on Black Friday. Over the past six months, the stock has underperformed competitors Kohl's (KSS) and Macy's (M).
See also: These 10 Stocks Are Heavily Shorted
Investors interested in exchange traded funds focused on insider sentiment might want to consider the following trades.
Traders may prefer to consider these alternative positions to some of the stocks listed above:
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