logo
  Join        Login             Stock Quote

What Insiders Are Buying In The Market Downturn

 August 10, 2011 11:07 AM
 


In stressful times like these, it's important to distinguish between investors' appetite for stocks in general and the actual outlook of each company. The market plunge is related to top-down concerns about the U.S. economy, but a bottom-up approach is still warranted. This is because -- despite the weak stock market performance -- a company can do well even if its industry isn't doing that well. In some cases, even though a business is doing OK, the stock price is signaling distress and hitting all-time lows.


This is when officers, directors and major shareholders (collectively known as insiders) usually act. They have the best view of the company's stock fundamentals, so they gauge the company's health by the day. So when a choppy market pushes the stock down below any sort of fair value, these insiders can respond with their checkbooks. In fact, there's been a massive wave of insider-buying since the market hit the skids on July 22. To cover all of the names would take quite some time. But this should send a clear signal that there is value to be had in this market.

To focus investors' sights, I've limited the view to companies with at least $400,000 in recent insider-buying. I've also tossed out stocks that have rebounded as a result of this buying pressure. All of the stocks in the table below trade for less than what insiders have paid for them. But don't let that dishearten you. Insiders often have a long-term view and are prepared to wait out any short-term gyrations.

 

The book-value buyers
Financial stocks can often be found on insider-buying lists during tough times because insiders know tangible book value is a floor that is rarely breached. When a company's market value falls below this level, a solid buying opportunity emerges. Morgan Stanley (NYSE: MS), for example, is now valued at about $36 billion, well below the $47 million in tangible book value found on its balance sheet. This roused the interest of a range of company directors on the week of Aug. 1, as they bought nearly $4 million in stock when it hit a two-year low price of $19.28.


Next Page >>123
iOnTheMarket Premium
Advertisement

Advertisement


Comments Closed


rss feed

Latest Stories

article imageRussell 2000 Showing Relative Weakness at the New Highs

A quick “Quad Index” Grid shows us that the small-cap Russell 2000 is showing relative strength to the read on...

article imageThe Poster Boy For Liberal Economics Discovers The Tax Factor

Paul Krugman seems to be having a supply-side-economics moment… sort of. Raising taxes, the NY Times read on...

article imageMacroprudential Policy And Distribution Of Risk

There is very little doubt that housing prices and leverage played a strong role in the global financial read on...

article imageIs the World Turning Japanese?

Many really think so, but reality suggests read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.