How About Following The Smart Money Into These Stocks?
Brian is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
As we all find it more and more challenging to outperform the general market averages with the current "Fiscal Cliff" fiasco, ongoing European debt worries, unemployment continuing to stay high, and other uncertainties, investors are left wondering where to put their money. 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 more 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:
Financial behemoth American Express (NYSE: AXP) is well-known for its credit card among many of its other products. The company has been range bound the past year, but has recently trended lower and now sits about 10% below its $61.42 52-week high creating possibly a buying opportunity. Board director Jan Leschly seems to think so buying an impressive 70,500 shares on November 19 at an average price of $55.19 equating to just under $3.9 million worth of stock. This is a nice bullish indicator and looking deeper at the fundamentals, it’s nice to have the very well-respected Berkshire Hathaway (NYSE: BRK-B) as your largest shareholder owning over 13.5%. Moreover, with a world-class brand name, strong returns on equity and a respectable and consistently growing 1.4% dividend yield, I think American Express is a solid long-term buy for the income investor today at these levels as well.
Sirius XM Radio (NASDAQ: SIRI) has a virtual monopoly in the United States on the fast growing satellite radio market which after years of heavy losses has finally started to quite profitable. The company earned over $2.2 billion in net income over the past twelve months, while as of October 2012 increased its subscriber base to approximately 23 million. The company has recently traded lower from its $2.97 52-week high and major shareholder Liberty Media seems to think it’s a nice buying opportunity. From November 14-16, Liberty Media (NASDAQ: STRZA) bought almost 31 million shares at an average price of $2.66 equating to a massive $82.4 million worth of stock. On the surface, Sirius looks to be firing on all cylinders as the company has scorching returns on equity exceeding 140% and consensus analyst estimates are still expecting annual revenue growth to exceed 25%. However, it should be noted that Liberty essentially owns this firm now and it’s anybody’s guess as to what their plans will be in the near future. I think with Sirius continuing to perform well and trading at a real cheap .2x PEG ratio, investors are being well compensated for that uncertainty and should have this as a speculative position.
Wiseinvestors has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend American Express Company and Berkshire Hathaway. 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!