I’ve written recently about insider buying. As I wrote before, company insiders can sell their company’s stock for any number of reasons. Perhaps they are diversifying or reallocating their portfolios, or perhaps they decided to pony up for a beach house.
But there is only one reason why company insiders would buy their company’s stock, and that is because they consider it underpriced and due for a bounce.
With that in mind, I ran a stock screen for insider “cluster buys,” or large purchases by multiple insiders. In order to make the cut, a stock had to have multiple, unique insider buys over the past three months. And with no further ado, here is a list of the top five ranked by number of insider buys:
Aircastle Ltd (AYR): 21 insider buys for a total 663,400 shares.
RLJ Entertainment (RLJE): 12 insider buys for a total of 30,082 shares
ERF Wireless Inc (ERFB): 9 insider buys for a total of 229,412 shares
Remax Holdings Inc (RMAX): 9 insider buys for a total of 51,450 shares
Main Street Capital Corp (MAIN): 9 insider buys for a total of 6,113 shares
Of each of these stocks, only two have had significant price movements since the insider trading began. ERF Wireless is down 72% and Remax is up 37%.
An insider buying screen does not constitute exhaustive research, of course. You still need to roll up your sleeves and investigate any stock before you buy it. But a screen like this can be a useful first step. If the insiders are buying, it’s a stock that is worth a look.
- CEO Buys, CFO Buys: Stocks that are bought by their CEO/CFOs.
- Insider Cluster Buys: Stocks that multiple company officers and directors have bought.
- Double Buys:: Companies that both Gurus and Insiders are buying
- Triple Buys: Companies that both Gurus and Insiders are buying, and Company is buying back.
About the author:
Mr. Sizemore has been a repeat guest on Fox Business News, has been quoted in Barron’s Magazine and the Wall Street Journal, and has been published in many respected financial websites, including MarketWatch, TheStreet.com, InvestorPlace, MSN Money, Seeking Alpha, Stocks, Futures, and Options Magazine and The Daily Reckoning.