What are the insiders buying?

When company executives start buying their own stock, it can mean there's money to be made.

By Benzinga Jan 22, 2013 1:42PM
Image, Stock investor copyright Tom Grill, CorbisBy Nelson Hem 

Insiders may sell shares for any number of reasons, but there is really only one reason insiders buy shares of a company -- they believe the stock price will move higher 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. Here are some stocks that have seen insider buying recently.

Adobe Systems (ADBE): One director purchased 5,000 shares of this diversified software company in the past week, worth more than $190,000. Last week, Adobe pulled back after hitting a 52-week high, and it was a Zack's Bear of the Day. 

It has a market capitalization of about $18.8 billion. Its price-to-earnings (P/E) ratio is less than the industry average and the long-term earnings per share (EPS) growth forecast is almost 12%. Shares are up about 19% from six months ago, and the stock has outperformed Microsoft (MSFT) and Oracle (ORCL) in that time. (Microsoft owns and publishes Top Stocks, an MSN Money site.)

Darden Restaurants (DRI): This past week, a director purchased 11,000 shares, worth more than $494,000. The market cap of this operator of Red Lobster, Olive Garden and other chains is about $5.9 billion, and its dividend yield is about 4.4%. The long-term EPS growth forecast is about 1%, and the return on equity is more than 25%. Shares have dropped more than 15% in the past 90 days and are less than 2% lower than a year ago. The stock has underperformed Brinker International (EAT) and DineEquity (DIN) over the past six months.

DaVita (DVA): So far this month, Warren Buffett's Berkshire Hathaway (BRK.A), a beneficial owner, has purchased more than 409,000 shares, worth almost $87 million, in this Denver health care company. Its market cap is about $10.8 billion. The long-term EPS growth forecast is about 13% and the return on equity is more than 23%. The share price is once again approaching the multi-year high hit in November, boosted by recent news of the company's expansion. DaVita has outperformed competitor HealthSouth (HLS) over the past six months.

NuStar Energy (NS): A director recently bought 3,000 shares, which was worth more than $127,000. This San Antonio company stores and transports petroleum products worldwide, but it recently sold a refinery in its hometown. It has a market cap near $4 billion and a distribution yield of more than 8%. But the long-term EPS growth forecast is only about 6%, and the return on equity is in the red. The stock has been on a roller coaster, plunging more than 17% in November and surging more than 14% in January. Over the past six months, the stock has underperformed the likes of Plains All American Pipeline (PAA).

Opko Health (OPK): The chairman continues to periodically buy batches of shares, as he has done for more than a year. He bought 276,000 shares so far this month, which is worth more than $1.45 million. This Miami-based health care company has a market cap near $1.8 billion. Short interest is a hefty 22 percent of the float. Shares have jumped about 21 percent year to date, partly on news of recent acquisitions and an expanded collaboration. Because of the spike to a new 52-week high, the stock has outperformed competitors such as Allergan (AGN) over the past six months.

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