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The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (
Insider Monkey) -- We track corporate insiders because we believe that they have an edge over ordinary investors. Academic research has shown that
insider purchases on average outperform the market in the following 12-month period. Even small insider purchases are marginally profitable. The reason is simple. Insiders usually have a lot of exposure to their companies' performance. They will only increase their exposure when they have strong reasons to believe that their purchases have a high probability of being profitable.
In this article, we are going to focus on the cheap U.S. stocks insiders bought recently. All companies have at least $2 billion market cap, P/E ratio lower than 15, and were purchased by at least one insider within the past month. The market data is sourced from Finviz.
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Wells Fargo & Company
E. I. du Pont de Nemours and Company
PNC Financial Services Group Inc.
Best Buy Co. Inc.
Reliance Steel & Aluminum Co.
Rhino Resource Partners LP
Gannett Co., Inc.
NII Holdings Inc.
Icahn Enterprises, L.P.
Lexmark International Inc.
Kronos Worldwide Inc.
The cheap stock with the most insider purchases over the past month is
US Bancorp (USB - Get Report). It was purchased by
two insiders. Joseph Hoesley purchased 1,500 shares at $25.55 on Jan. 27. Three days earlier, Lee Mitau also bought 1,500 shares at $25.35 per share. Now USB is trading at $27.83 per share. It has a market cap of $53 billion and a low P/E ratio of 11.33. It also has a low forward P/E ratio of only 9.51.
US Bancorp is a multi-state financial services holding company. It recently reported fourth-quarter net income of $1.4 billion in 2011, compared with $1.3 billion for the same quarter a year earlier. Its annual net income in 2011 is $4.9 billion, up from $3.3 billion in 2010. USB is also quite popular among hedge funds. There are 36 hedge funds with USB positions at the end of September.
Warren Buffett is the most bullish hedge fund manager about USB. His
Berkshire Hathaway(BRK.A) had $1.6 billion invested in the stock.
Lee Ainslie, and
Ken Griffin are also among USB investors.
Icahn Enterprises(IEP - Get Report) has the lowest P/E ratio among the stocks listed above. It has a market cap of $3.2 billion and a P/E ratio of only 6.23. IEP was also purchased by one insider during the past month.
Carl Icahn, director at the company, bought 12,583,829 shares of IEP at $36.7933 per share on Jan. 20. Now IEP is trading at $37.57 per share. At the end of the third quarter, Carl Icahn's
Icahn Capital has $2.9 billion invested in IEP.
Murray Stahl'sHorizon Asset Management also reported to own $50 million worth of IEP shares at the end of September.