Mr. Bowman is a portfolio manager at Hamilton-based Wickham Investment Counsel Inc., an adviser to high-net-worth clients.
What are we looking for?
According to Bloomberg, as of the middle of last month a total of 7,181 U.S. insiders bought their own stock this year, and 23,323 sold shares. The ratio of buys to sells is near the lowest level since 2000. While companies are buying their own stock, the officers and directors aren't. Studies have shown that insiders tend to outperform the market through their buying and selling activities, according to INK Research.
My colleague Rob Belanger and I thought we would take a look to see if any insiders have been buying lately.
The screen
We started with North American companies where insiders held more than 2 per cent of the outstanding shares, and the market capitalization of our companies had to be more than $1-billion.
The number of insider buys had to be more than the number of insider sells during the past six months.
The per cent change in insider holdings had to be more than 2 per cent, and we have sorted our companies from the largest to the smallest.
We are also showing stock price change in per cent over the past 90 days, 60 days and 30 days.
What did we find?
Only two companies had positive stock price appreciation over the past 90 days.
Originally called zag.com, TrueCar Inc., based in Santa Monica, Calif., provides automotive pricing and information on its website for new car buyers and dealers. The stock price has increased more than 36 per cent in the past 90 days.
Accelerate Diagnostics also had a positive stock price performance over the past 90 days. The company is an in vitro diagnostics company that provides solutions for hospital-acquired infections and drug resistance organisms.
Five Canadian companies made our list: Onex Corp., Surge Energy Inc., Element Financial, New Gold and NuVista Energy Ltd.
Conclusion
Insider trading is just one of many factors that investors should consider before buying shares in any company. While insiders sell for many reasons, they buy only because they anticipate the share price will appreciate, but keep in mind insiders tend to be a bit early in their purchases.
Contact an investment professional or conduct further research before buying any of the companies mentioned here.