Icahn Enterprises, Sears Holdings and Other Stocks Insiders Are Buying
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.
Dresser-Rand Group (NYSE: DRC): The chief executive office has purchased more than 17,000 shares of this Houston-based industrial equipment maker. That was worth more than $1 million.
The company fell short of consensus fourth-quarter earnings and revenue estimates and more recently announced the retirement plans of the chief financial officer.
Dresser-Rand has a market capitalization of about $4.4 billion. The long-term earnings per share (EPS) growth forecast is more than 36 percent and the return on equity is near 18 percent.
Shares pulled back about nine percent after the earnings report, erasing much of the year to date gain. But the stock has outperformed Siemens (NYSE: SI) over the past six months.
Icahn Enterprises (NYSE: IEP): Chairman Carl Icahn bought 15,900 shares at the beginning of the month. That was worth more than $1 million. The president, two directors, and an executive vice president together purchased a combined 5,900 shares, as well.
This New York-based conglomerate has a market cap of about $6.4 billion and a dividend yield near 6.7 percent. The return on investment is almost 14 percent and the price-to-earnings (P/E) ratio is lower than the industry average.
The share price spiked in February and has since retreated, but it is still up more than 27 percent year to date. Over the past six months, the stock has outperformed Berkshire Hathaway (NYSE: BRK-B).
NuStar Energy (NYSE: NS): Two directors recently bought a combined 86,000 shares, which was worth more than $4.1 million of this petroleum products transportation and storage company. Those buys followed an analyst's downgrade prompted by potential risk to the dividend.
San Antonio-based Nustar Energy has a market cap near $3.9 billion and a dividend yield of about 9.1 percent. But the long-term EPS growth forecast is less than three percent and the operating margin is less than the industry average.
The share price rose more than three percent in the past week, largely recovering from the recent pullback. Over the past six months, the stock has outperformed larger competitor BP (NYSE: BP).
Opko Health (NYSE: OPK): The chairman continues periodically to buy batches of shares, as he has done for more than a year. He bought 183,000 shares in the past week, which is worth more than $1.3 million. Opko completed an acquisition this week.
This Miami-based health care company has a market cap near $2.2 billion. Short interest is a more than 20 percent of the float. Shares have jumped more than 49 percent year to date, including more than seven percent in the past week. The stock has outperformed competitors such as Allergan (NYSE: AGN) over the past six months.
Sears Holdings (NASDAQ: SHLD): This past week, CEO Eddie Lampert purchased more than 1.2 million shares, worth more than $54.9 million. The retailer narrowed its loss in the fourth quarter and beat consensus revenue estimates.
Sears has a market cap of about $5.3 billion. Analysts have no long-term EPS growth forecast, and the return on equity is in the red. Short interest is more than 10 percent of the float. The share price started the year near the 52-week low, but it rose more than 11 percent following Lampert's purchase.
Investors interested in exchange traded funds focused on insider sentiment might want to consider the following trades.
- Direxion All Cap Insider Sentiment Shares (NYSE: KNOW) is up more than 13 percent year to date.
- Guggenheim Insider Sentiment (NYSE: NFO) is up more than eight percent year to date.
Traders may prefer to consider these alternative positions to some of the stocks listed above:
- Avery Dennison (NYSE: AVY) is almost 19 percent higher year to date.
- CBRE Group (NYSE: CBG) is about 21 percent higher year to date.
- Sunoco Logistics Partners (NYSE: SXL) is more than 29 percent higher year to date.
- Boston Scientific (NYSE: BSX) is about 27 percent higher year to date.
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Tags: Allergan, Avery Dennison, Berkshire Hathaway, boston scientific, bp, Carl Icahn, CBRE Group, Dresser-Rand Group, Eddie Lampert, Icahn Enterprises, J.C. Penney, NuStar Energy, Opko Health, Sears Holdings, siemens, Sunoco Logistics Partners, Target