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What the Insider Crowd's Buying

Luminent (LUM) was one of the hardest-hit mortgage REITs. As its indicated yield fell because of disappointing earnings, its share price collapsed by more than 40% last August and September. Insiders bought in last November and already have seen those bets pay off. Their continued buying now seems to indicate that more capital appreciation is likely, which is the real reason to buy Luminent because its indicated yield remains a relatively paltry 2.2%.

But not every mortgage REIT had such a harsh decline in its payout, yet saw shares suffer anyway. This seems to have made yields in these names too tempting for insiders to ignore. The higher-yielding insider-buying candidates in this sector include:

  • Northstar Realty Finance (NRF), with an indicated yield of 11.0%.
  • Deerfield Triarc Capital (DFR), 11.1%
  • Newcastle Investment (NCT), 10.7%
  • JER Investors Trust (JRT), 6.3%
  • Affordable Residential Communities (ARC - Get Report), 7.1%

Also represented in the buying-the-yield trend are good ol' energy master limited partnerships (MLPs). The two that caught my eye in the recent data were Inergy (NRGY) and Martin Midstream (MMLP - Get Report). They are expected to yield 8.3% and 8.0%, respectively, but I think their prospects for organic growth argue for some capital appreciation as well.

MLPs generally store and transport oil and gas through extensive pipeline assets (the so-called "midstream" of the energy sector) and are organized to distribute most of their net income to unit holders. They have been safe bets in the recent past, and judging from insider sentiment, they should do just fine in the near future as well.

P.S. from TheStreet.com Editor-in-Chief, Dave Morrow:
It's always been my opinion that it pays to have more -- not fewer -- expert market views and analyses when you're making investing or trading decisions. That's why I recommend you take advantage of our free trial offer to TheStreet.com's RealMoney premium Web site, where you'll get in-depth commentary and money-making strategies from over 50 Wall Street pros, including Jim Cramer. Take my advice -- try it now.


Please note that due to factors including low market capitalization and/or insufficient public float, we consider MMR, MWP, LUM, NRF, JRT, ARC and MMLP to be small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

At the time of publication, Moreland was long MMLP, NRGY, GDP and NRF, although holdings can change at any time.

Jonathan Moreland is director of research and publisher of the weekly publication InsiderInsights, founder of the Web site InsiderInsights.com and the director of research at Insider Asset Management LLC. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While he cannot provide investment advice or recommendations, Moreland appreciates your feedback; click here to send him an email.

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SYM TRADE IT LAST %CHG
NRGY $14.97 2.11%
MMR $0.00 0.00%
FST $0.20 -4.76%
NRF $18.97 0.00%
ARC $9.01 0.00%

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