Article by Investment U
Investors take note…
Tracking the moves of corporate insiders is one of the most powerful signals that a stock is set to head higher.
For instance, our very own Chief Investment Strategist Alexander Green runs a research service within The Oxford Club that recommends stocks based partially on the moves of corporate insiders.
And already this year, his service has booked gains of 40%, 87%, and even 90%, to name a few. One of his open positions is even over 100% as I write.
While an insider may sell shares of their company for a multitude of reasons (i.e. buying a new home, sending kids to college, divorce) there’s typically just one reason they ever buy shares…
They think the stock is about to soar higher.
Insiders have access to information not available to outside investors. They may know the direction of sales since the last quarterly report… whether there are any new products in development… if the company has gained or lost any major customers… whether there is any takeover interest in the company.
In short, they have a huge advantage over average investors when they trade their shares on the market.
But here’s why the “less-fortunate” of us should be happy about this and not envious.
Each transaction requires a Form 4 filing with the U.S. Securities and Exchange Commission (SEC).
These forms show exactly how many shares they are trading. And they give us insight to which companies we should be keeping an eye on.
One of my favorite websites to scour for these insider transactions is InsiderMonkey.com.
The website has a tab specifically called “Insider Trading” that lets you see who’s buying what from any company that trades on the NYSE.
For instance, just a couple of days ago, the website posted that the CEO of OPKO Health Inc. (NYSE: OPK) purchased 35,000 shares of his company for an estimated $153,388.
And after digging a bit deeper, it turns out this same CEO has bought over $17 million worth of his company’s stock over the past 6 months.
Think he expects OPKO’s share price to skyrocket?
You bet he does.
In fact, Reuters reports, OPKO CEO, Dr. Phillip Frost, “is holding 128,490,000 of the firm, which makes up about 43% of the company.”
OPKO has a couple of promising developments right now that could make it worth a closer look.
- It has a drug called Rolapitant that is in Phase III trials to treat nausea and vomiting brought on from chemotherapy. Considering the annual cost of cancer treatments in the U.S. cost roughly $115 billion, this could be a blockbuster for the company if all goes well through its trial completion in June 2013.
- The company is also developing an Alzheimer diagnostic test that is currently scheduled to launch in 2013. It could be another major contributor to the company’s bottom line for several years to come.
Analysts have pinned the stock to hit $8.25 per share over the next 12 months.
Considering the stock is trading at roughly $4.50 per share now, this could be the perfect time to ride Dr. Frost’s coattail all the way to the bank.
Good Investing,
Mike
Article by Investment U
