AOL, Kinder Morgan and Tyco International are among the companies that have seen insider buying lately. So is Opko Health, which sees insiders frequently scooping up shares.
Insiders may sell shares for any number of reasons, but conventional wisdom says that insiders really only buy shares of a company for one reason -- they believe the stock price will rise and they want to profit from it. Pullbacks and sell-offs provide a perfect opportunity for investors who have faith in a company to snap up shares.
CEO Tim Armstrong bought 55,600 shares of AOL (NYSE: AOL) last week. One other director also picked up 700 shares. That followed a disappointing first-quarter report and the resulting steep sell-off of shares. Restructuring charges received the blame for those results.
The market capitalization is about $3 billion and the long-term earnings per share (EPS) growth forecast is around 12 percent. AOL pays no dividend. Shares have recovered some from the pullback, but are still down more than nine percent in the past month. Over the past six months, the stock has underperformed the likes of Google and Yahoo.
In the wake of a better-than-expected earnings report, CEO George Zoley scooped up almost 47,000 shares of GEO Group (NYSE: GEO), a real estate investment trust focused on correctional facilities. That was worth more than $1.5 million and raised his stake to 800,000 shares.
The market cap is about $2.4 billion and it offers a 6.7 percent dividend yield. The long-term EPS growth forecast is about 15 percent, and the price-to-earnings (P/E) ratio is less than the industry average. Shares have climbed almost eight percent in the past month. Over the past six months, the stock has outperformed Corrections Corp. of America.
Hornbeck Offshore Services
Altogether, the CEO and two directors bought more than 58,000 shares of Hornbeck Offshore Services (NYSE: HOS) last week. That was worth about $2.26 million, and the transactions came as shares slumped following the most recent quarterly report.
Hornbeck has a market cap near $1.5 billion. Its operating margin is higher than the industry average, and the long-term EPS growth forecast is greater than 54 percent. Shares hit a 52-week low after the earnings report, but have risen about five percent since then. The stock has outperformed peers Seacor and Tidewater in the past six months.
Richard Kinder, CEO and chairman of Kinder Morgan (NYSE: KMI), acquired more than .23 million worth of shares. That was 100,000 shares of the stock of this midstream and energy company, which recently announced plans to expand its carbon dioxide infrastructure.
Kinder Morgan has a market cap of more than $33 billion and a dividend yield near 5.2 percent. Its P/E ratio is less than the industry average, and the long-term EPS growth forecast is more than 11 percent. The share price is down more than ten percent year-to-date. Over the past six months, however, the stock has outperformed the Nasdaq and the S&P 500.
See also: Sears And Others Insiders Have Been Buying
Chairman Philip Frost continues to buy batches of shares periodically, as he has done for more than a year. He picked up more than 234,000 Opko Health (NYSE: OPK) shares so far this month, for a total price of more than $1.9 million. First-quarter results fell short of consensus expectations.
This Miami-based health care company has a market cap of more than $3.4 billion, and short interest is more than 21 percent of its float. Shares have traded mostly between $8.00 and $8.40 since mid-April. Over the past six months, the stock has underperformed larger competitors Abbot Labs and Medtronic.
One director bought around $2 million worth of Tyco International (NYSE: TYC) shares recently. That raised his stake from less than 12,000 shares to more than 60,000. This came as the provider of security and fire protection systems said it was mulling a move from Switzerland to "business friendly" Ireland.
The market cap is almost $20 billion. Tyco offers a dividend yield near 1.7 percent. The long-term EPS growth forecast is more than 14 percent and the operating margin is better than the industry average. The share price is only about two percent higher year-to-date. The stock has narrowly underperformed Honeywell and the S&P 500 over the past six months.
At the time of this writing, the author had no position in the mentioned equities.
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