It's not always true, of course, but it's worth noting. So if you're on the fence about Simon Property Group (SPG), Enterprise Products (EPD), CVS Caremark (CVS), DirecTV (DTV) and Dr. Pepper Snapple Group (DPS), you may want to take another look. All have all seen high levels of insider buying lately.
Company insiders such as CEOs, board members or other corporate officers are perhaps best able to assess their own company and its stock's potential, as they have the inside scoop on the goings on within their firm.
What often happens is that when there is a period of heavy insider buying, a stock tends to rise substantially. And while this relationship between heavy insider buying and a stock's rise is by no means causal, what does tend to happen is that professional investors -- hedge funds, mutual funds, pension funds -- will identify that heavy insider buying and then go with the insiders. In effect, these professional investors are saying that they'll have what the insiders are having.
Over the past three months, there's been heavy insider buying in many high-profile stocks. Not all of these stocks have seen a sharp rise in their share price over this time period, but there have been a handful of stocks with both big insider buying and big price moves that merit further investor attention. Let's take a look at five of these stocks now.
According a Bloomberg screen of large-cap stocks showing heavy insider buying over the past three months, real estate investment trust Simon Property Group was among the companies with the most insider buying based on share price market value. The big insider buying in SPG -- nearly $26 million in market value over the past three months-was accompanied by a 19.9% rise in the stock over the same period. Though some think REITs are overvalued right now, SPG is certainly worth another look.
Another stock showing heavy insider buying is oil and gas services firm Enterprise Products. The firm's insiders picked up over $15 million worth of the stock since late January, and the share's gained 11.5% over that time period. There also was heavy insider buying in retail pharmacy giant CVS Caremark with over $5 million in market value bought by insiders. That stock is up 11% over the past three months.
Two more stocks showing strong insider buying are DirecTV and Dr. Pepper Snapple Group. DirecTV saw nearly $2 million worth of its stock bought up by insiders over the past several months, while Dr. Pepper Snapple Group witnessed insiders drink up over $1 million worth of stock. DTV shares climbed 12.3% since late January, while DPS shares fizzed 21.8% higher over the same period. Considering rival Dish Network slashed its CEO pay 95% recently, the contrast could not be clearer in the satellite TV business.
Judging by the both the heavy insider buying and the accompanying share price appreciation of these five stocks over the past three months, investors may want to think about having what these insiders are having.
As of this writing, Jim Woods did not own positions in any of the stocks mentioned here.