Is it Time to Accumulate These Stocks as Well?
Ali is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Investors are always looking for ways to beat the market and insider buying is always a strong indicator that a stock is looking to move higher since they buy for only one reason: to make more money. Moreover, they arguably have the best view of where a stock is headed being a part of the day-to-day operations and/or having a large sum of money at stake. Below are a couple stocks with sizeable insider buying.
American Realty Capital Trust (NASDAQ: ARCT) is a REIT (real estate investment trust) focused on acquiring leased commercial properties already leased to investment grade tenants. On April 17, there was notable insider buying by the President and CEO William Kahane buying 10,000 shares bringing his total ownership stake to 261,451 shares along with board director Nicholas Schorsch raising his total ownership stake to just over 990,000 shares with a 10,000 share purchase of his own. This is always encouraging when owners with already sizeable ownership stakes raise them higher and ARCT’s business model is one I believe in as many commercial properties are selling for sizeable discounts. The company has virtually no trading history though as it just went public on March 1, so we don’t know for sure how well management has been in rewarding shareholders. Fellow office and retail REITs Simon Property (NYSE: SPG) and its respectable 2.6% dividend yield is worth a look as well as mortgage REIT Anally Capital (NYSE: NLY) and its 14% dividend yield. However, an investor should beware of the leverage and cyclical risk especially in the case of NLY as described here.
Opko Health (NYSE: OPK) is a diversified medical company run by Chairman, CEO, and major shareholder Dr. Phillip Frost. On Apr. 13, Dr. Frost bought yet another 100,000 shares bringing his total ownership of OPK to just under 111 million shares or approximately 38% of the total shares outstanding as of the most recently reported quarter. He obviously is very bullish on OPK, however, the company’s fundamentals are less than “foolish” as the company lost just under $9 million in net income the past twelve months and currently sporting negative profit and operating margins of 47%. I definitely wouldn’t short the stock and may in fact go long eventually since this consistent insider purchasing is very rare, but I personally have no idea on the viability or probability of OPK’s products and see this purely as an investment in Dr. Frost if one chooses to buy shares. An investment that makes more sense to me is one like Pfizer (NYSE: PFE) with its consistent 4% yield and management further unlocking shareholder value by selling its nutrition unit for approximately $8 billion to Nestle.
As always, respectful comments and questions are welcome below on the message board.
Motley Fool newsletter services recommend Pfizer. The Motley Fool owns shares of Annaly Capital Management. Prohomes has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
