Both Sears Holdings and Sears Hometown and Outlet Stores have seen insider buying lately. So have Aircastle and Opko Health, which frequently see insiders scooping up shares.
Insiders may sell shares for any number of reasons, but conventional wisdom says that insiders really only buy shares of a company for one reason -- they believe the stock price will rise 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.
Japanese trading company Marubeni Corp. has been scooping up batches of Aircastle (NYSE: AYR) shares since last August. That included more than 239,000 of them in the past two weeks, for more than $5.5 million. The jet-rental company Aircastle has been a rumored takeover target.
The market capitalization is about $1.5 billion and the long-term earnings per share (EPS) growth forecast is more than 34 percent. The dividend yield is about 4.3 percent. Shares have traded mostly between $18 and $20 since the end of October. Over the past six months, the stock has underperformed competitors Aercap and Air Lease.
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A hedge fund with a greater than 10 percent stake in Equinix (NASDAQ: EQIX) acquired more than $12.3 million worth of shares. That was almost 7,200 shares of this data center and Internet services company. An analyst upgraded the stock last week, citing potential growth in the cloud.
Equinix has a market cap of almost $9 billion. But its price-to-earnings (P/E) ratio is very high, and short interest is about 21 percent of the float. The share price hit a year-to-date low earlier this month. But over the past six months, the stock has outperformed the Nasdaq and the S&P 500.
A director bought more than $900,000 worth of Esterline Technologies (NYSE: ESL) shares last week. That was the first insider buying at this aerospace and defense contractor since the same director bought more than 103,000 shares back in December.
The market cap is more than $3 billion and the long-term EPS growth forecast is about 11 percent. Its 20.2 P/E ratio is in line with the industry average. It offers no dividend. The share price is about the same as three months ago. But the stock has outperformed competitors Boeing and United Technologies over the past six months.
The chairman continues to buy batches of shares periodically, as he has done for more than a year. He picked up more than 240,000 Opko Health (NYSE: OPK) shares last week, for a total price of almost $2 million. The chief technology officer also bought 10,000 shares last week.
This Miami-based health care company has a market cap of more than $3 billion, and short interest is about 21 percent of its float. The share price is down more than 16 percent in the past month. Over the past six months, the stock has underperformed competitor Allergan and the broader markets.
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One director scooped up a total of 475,000 shares of Sears Holdings (NASDAQ: SHLD) last week. That was worth almost $16 million, and it brought his holdings in the struggling retailer to around 3.7 million shares, making him one of its largest shareholders.
The market cap is about $4 billion, but its return on equity and its operating margin are both still in negative territory. Short interest is more than 20 percent of the float. Over the past six months, the stock has underperformed the S&P 500. But the share price rose more than 14 percent last week, largely due to this insider buy.
Sears Hometown and Outlet Stores
Hedge fund manager and Sears Holdings CEO Eddie Lampert bought 3.5 million shares of Sears Hometown and Outlet Stores (NASDAQ: SHOS). That was worth more than $16.4 million, and it came in the wake of the spin-off of Lands' End from Sears Holdings.
Sears Hometown and Outlet Stores has a market cap near $500 million. Its operating margin is less than the industry average, and short interest is about four percent of the float. Shares hit a 52-week low last week after declining more than 20 percent year to date. But it has outperformed Sears Holdings in the past six months.
At the time of this writing, the author had no position in the mentioned equities.
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