There may be lots of reasons to avoid the stock market these days. But there’s one big clue that stocks of certain companies may still be attractive—top executives and directors are scooping up depressed shares of those stocks. These “insiders” are presumably in the best position to assess the outlook for the companies. Their buy/sell decisions could indicate whether it makes sense for small investors to do the same. What to watch for…
- Three or more insiders buy company stock at about the same time. (To review recent insider-trading activity, go to FinViz.com/insidertrading.ashx.)
- Their new purchases equal at least 5% of what they already own.
- Their purchases are made on the open market with their own money rather than by exercising company stock options.
- The company has steady or increasing annual earnings.
Two stocks with heavy recent insider buying that meet the above criteria…
Energizer Holdings (ENR) makes recession-resistant consumer products such as Energizer and Eveready batteries. It acquired a line of automotive-care products, including Armor All waxes and STP motor oil, from Spectrum Brand Holdings. Eight executives and directors recently bought more than $1.6 million worth of shares.
Macerich Co. (MAC) is a real estate investment trust (REIT) that owns 48 high-end regional malls. Four insiders, including the CEO, recently purchased a total of $1.1 million worth of shares. Many investors have abandoned shopping-mall REITs as retailers and consumers move online, but Macerich’s properties continue to have high occupancy and charge premium rents because they generate high foot traffic and sales.