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What the Insider Crowd's Buying

This column was originally published on RealMoney on May 31 at 8:25 a.m. EDT. It's being republished as a bonus for readers.

Although I am officially on a "sell" signal now and am primarily in cash, I admit to being a bit more impressed this week with the very large number of companies whose insiders are already indicating value during this selloff. I'm not ready to pounce myself, but if you are intent on trying to bottom-feed at this time, you might as well start by looking at what insiders are buying.

When I look at insider trends, I don't just tally the numbers from the raw data. I sort through the filings and assess whether I consider the activity significant. I have various systems to help score the data, but in the end, it comes down to actually pulling up the insider histories of the companies and individual executives to help analyze the actions.

There's just no substitute for eyes-on investigation, and I find that I get much better insight into trends when I stay focused on the higher-quality information that I derive from such analysis.

As I sorted through three weeks' worth of data this holiday weekend, two buying trends stood above the rest: energy and high yields.

Energetic Buying

The energy sector continues to garner support from its executives, indicating that relief from high oil and gas prices is not likely in the near future. I reiterated that a few of my longer-term energy plays looked buyable on May 19 . It's good to see that general call confirmed by insiders yet again. There are also some newer names to choose from in the recent data, including exploration-and-production firms:
  • McMoRan Exploration(MMR)
  • Goodrich Petroleum(GDP - Get Report)
  • Forest Oil(FST)
  • MarkWest Hydrocarbon(MWP)
  • Helix Energy Solutions(HELX)

All of these stocks are off their recent highs by 9% to 40% and are arguably fine long candidates for anyone willing to think beyond the correction we seem to be in the midst of.

In fact, I believe anyone with any money in the market should have some exposure to the energy sector.
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NRGY $14.97 2.11%
MMR $0.00 0.00%
ARC $5.00 -1.10%
GDP $0.34 -15.00%
FST $0.20 -4.76%


Chart of I:DJI
DOW 17,888.35 +168.43 0.95%
S&P 500 2,102.63 +22.22 1.07%
NASDAQ 5,156.3060 +47.64 0.93%

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