3 Stocks With Insider Interest
Mohsin is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The global economy is still going through the initial stages of recovery and waiting on positive news from European markets. This bad economy has created uncertainty in the stock market, especially sectors that rely on consumer spending such as the technology sector. In such turbulent times it is a good method to observe insider trends before making major stock investments. The following companies have seen some insider interest during the last few months, but investors should still do in-depth due diligence before taking any positions.
Pacific Bioscience of California (NASDAQ: PACB)
Pacific Bioscience is involved in the development and commercialization of genetic analysis integrated platforms. This platform allows the development of technology that enables SMRT for the detection of biological processes, while focusing on the deoxyribonucleic acid sequencing market. The primary product of Pacific is PacBio Rs, which is a sequencing platform. The stock has fluctuated between $1 and $4 during the last 52 weeks. During the last 6 months investors have purchased 1.4 million shares of the stock, increasing the total insider holdings by 8%. In the same period, institutional investors have reduced their holdings by a staggering 31%. At these price levels the company is trading at a 10% discount to mean sell side estimates.
SandRidge Energy (NYSE: SD)
SandRidge is an independent oil and natural gas company that primarily operates in the states. The company has divided itself into three segments namely Drilling & Oil Field Services, Exploration & Production and Midstream Services. The stock is currently trading at a P/E of 29x, which is almost twice the industry average. The company has lost 32% of its value in the last year and 45% in the last two years.
In the last six months insiders have increased their holdings by 7.9 million shares, which is an 11% increase in shares held by insiders. However, during the same period institutional investors have reduced their SandRidge holdings by 18 million shares, a decrease of 5%. From a total of 27 analysts, 19 have a hold rating on SandRidge and four recommend buying the stock. The mean sell side target price is $6.3, which is a 13% premium to current valuations.
Lexicon Pharmaceuticals (NASDAQ: LXRX)
Lexicon is a pharmaceutical company focused on the development and discovery of treatments for various human ailments. The company has one of the stronger pipelines in the biopharmaceutical industry. It currently has six candidates undergoing clinical evaluation. Teloristristate is currently in the middle of Phase III clinical study and LX4211 for diabetes has completed Phase III trials. All other candidates are in Phase II trials expect LX7101 for glaucoma, which has ended Phase I trials.
Insiders have purchased approximately 3 million shares of the company, which comes out to 1.32% of total shares outstanding. Institutions have also shown interest in Lexicon Pharmaceuticals and have acquired approx. 12 million shares of the company during the last six months, increasing ownership by 2.5%. During the last 52 weeks the stock has traded in the range of $1.4 to $3.2. The mean sell side target price on the stock is $3 with the lowest price target being $2. From a total of seven analysts five have a buy rating on the stock and the other two have a hold rating.
Insider and institutional purchases can be a good indication of future price movements of a stock. The insiders have information that is unavailable to other investors, such as upcoming catalysts or the true value of the pipeline. On the other hand institutional investors have more resource at their disposal to better assess the value of an investment. That said, investors should do their own due diligence on these companies before making any investment decisions.
Mohsin Saeed has no position in any stocks mentioned. The Motley Fool recommends Pacific Biosciences of California. 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. Is this post wrong? Click here. Think you can do better? Join us and write your own!