Can We Make Money Following The 1%?
Brian is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Every investor or trader is always searching to find stocks that hopefully outperform the general market and alternative investment classes. Of course, during these unstable times that is rather difficult to execute and has us uncertain as to what is an effective strategy or criteria to use. One strategy that has proven to be effective over time in determining whether a stock is moving higher is insider accumulation, due to one simple reason: insiders buy shares, just like us, to make money. Furthermore, they have an enviable vantage point of the day-to-day operations of the company and/or have a large investment of their own which they like to see increase in value. The following are stocks that have recently had notable insider buying and serve as a nice stating point in your investment research:
Video game and interactive entertainment company Take-Two Interactive (NASDAQ: TTWO) has a wide array of products, including the Grand Theft Auto brand, NBA 2K, and Max Payne. The stock has not been inspiring the past 52 weeks, but has rebounded nicely from its $7.37 52-week low in the summer and continues to trend higher. Billionaire and major shareholder Carl Icahn certainly sees the stock moving higher buying 918,111 shares on November 8-9 at an average price of $11.10 equating to over $10.2 million worth of stock. This is certainly encouraging but looking deeper, the company’s most recent earnings report was a blowout exceeding consensus estimates by an astounding 29 cents or 161%. Nonetheless, the company has its share of worries in that it grossly missed consensus estimates in the prior two quarters and continues to burn cash. I’d put this as a speculative buy as the Christmas season and updated video game lineup should serve the company well, but the company does not have a huge margin of error and pays no dividend while we pay to wait. If looking for a quality video game company, I think Activision (NASDAQ: ATVI) is worth a look. The company has a pristine balance sheet and over $3/share in net cash. Moreover, it generates approximately $1 billion in free cash flow while paying a respectable 1.7% dividend yield.
Diversified asset management company Janus Capital (NYSE: JNS) provides services ranging from retirement planning to investing for college to fixed income investments. The company’s stock has been choppy throughout the year, but has recently pulled back from its $9.70 52-week high creating what looks to be a buying opportunity to major shareholder and Japanese firm Dai Ichi Life Insurance Company. The firm reported on November 6 that it bought collectively from November 2-5, 799,741 shares at an average price of $8.49 equating to over $6.7 million worth of stock. That’s always bullish and the company has since dropped even more to approximately $8/share creating what looks to me a decent buying opportunity as it pays now approximately 3% while continuing to generate healthy free cash flow. If looking to diversify with another asset manager, BlackRock (NYSE: BLK) is worth a look. The company has one of the most respected management teams that has navigated through the financial turmoil better than most. Add in the fact a consistently growing 3.2% dividend yield and attractive valuations and I think both of these should serve the long term income investor well.
I’d like to also say I appreciate you reading my thoughts and reiterate that these are just the views of the blogger and should not serve as a substitute for any professional financial advice or counsel in general. Respectful comments and questions are always welcome below on the comment board.
Wiseinvestors has no positions in the stocks mentioned above. The Motley Fool owns shares of Activision Blizzard. Motley Fool newsletter services recommend Activision Blizzard, BlackRock, and Take-Two Interactive . 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.If you have questions about this post or the Fool’s blog network, click here for information.