(This is an excerpt from an article I originally published on Seeking Alpha. Click here to read the entire piece.)
Since the market swoon began in earnest in August, I have become increasingly interested in the stock market’s reaction to the news of insider buying by company executives. In many cases, I have made the plunge alongside the insiders. Insider buying by executives at companies like First Solar Inc. (FSLR), Monster Worldwide Inc. (MWW), Molycorp (MCP), Coldwater Creek (CWTR), and Skullcandy (SKUL) have all caught my interest (I pay little attention to purchases by Board Directors). Swift Transportation (SWFT) is also on my radar. In almost each case, top executives made significant purchases as the stock of their respective companies traded at or near major lows. In almost each case the market has sent these stocks lower even after initially positive responses.
I assess each case in chronological order of the purchases (all charts provided by freestockcharts.com):
Molycorp (MCP) – insider purchase Aug 15
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Swift Transportation Co., LLC (SWFT) – insider purchases Aug 19 to Aug 23
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First Solar (FSLR) – insider purchases Aug 22 and Aug 24
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Monster Worldwide, Inc. (MWW) – insider purchases Aug 30
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Coldwater Creek (CWTR) – insider purchases Sep 6 to Sep 15, 2011
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Skullcandy, Inc. (SKUL) – insider purchase Sep 16, 2011
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I believe these insider purchases are encouraging signs in an otherwise sobering market. These are not all the insider buys from the past several months, but they have caught my interest. When added to all the stock buybacks that companies continue to announce, I have to believe that the grass is very green on the other side of whatever economic calamity still lies ahead.
Be careful out there!
(This is an excerpt from an article I originally published on Seeking Alpha. Click here to read the entire piece.)
Full disclosure: long MCP, FSLR, SKUL, and CWTR