Insider buying can often be a path for smart money. Although these transactions are regulated, it is likely that a financial officer has a better idea of where his company is headed than the average investor. These buys can also let investors know what price an insider feels is a fair valuation of a company's stock. Here are a few insider purchases that have taken place in the past month that are worth a second look.


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Giving Credit Where Credit Is Due
There has been $13.5 million worth of insider buying at AmeriCredit (NYSE:ACF) over the past couple of weeks. Although this stock is already trading at a 52-week high, apparently insiders are still bullish on its future. Earlier this month, the auto finance company reported that it turned a profit of 23 cents per share during its Q4. The results represented a major improvement from the company's net loss of $1.30 per share a year ago. AmeriCredit is now bracing itself for its seasonally slow second half of the calendar year.

One Giant Leap
On August 10, Mannkind Corporation (Nasdaq:MNKD) executed a secondary public offering, increasing the company's cash position by approximately $59.7 million. CEO Alfred E. Mann purchased one million of these shares. The company is coming off of a Q2 in which its net loss narrowed and its pipeline made noteworthy progress. Mannkind is primarily focused on advancing AFRESA, a fast-acting therapy for diabetic adults, through regulatory filings. In May 2009, an important milestone was achieved when the FDA accepted a new drug application (NDA) requesting approval to market AFRESA. If this product gets FDA approval, its future sales revenue could provide more funding for clinical research and development of the company's other product candidates.

Long-Term Play
Although I am monitoring the results at AmeriCredit and MannKind, I am particularly interested in the recent insider buying at Citigroup (NYSE:C). Citi's returns in 2009 lag those of many of its top competitors including Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS) and Bank of America (NYSE:BAC). However, Citi shares have really begun to heat up in recent weeks. The stock has surged 80% over the past 30 days.

According SEC filings, Citi's CEO, Eugene McQuade and the head of the company's Latin America operations, Manuel Medina-Mora each recently bought one million shares at prices ranging from $3.19 to $3.61. I think the executives are betting that these purchases will pay off over the long term. Citi's recovery might be long and arduous, but the company is already heading in the right direction. In July, the company reported net income of $4.3 billion, which was partially attributable to a record quarter by Citi's transaction services group.

Final Thoughts
Insiders are not always right, but their insight can be useful to individual investors. At the very least, big insider purchases can give value investors some potential opportunities. Should an investor decide to buy a stock based on insider activities, it is still important to conduct further research before pulling the trigger. (For more, read Delving Into Insider Investments.)




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Tickers in this Article: ACF, MNKD, C, GS, MS, BAC

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