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TheStreet Open House

Large-Cap Insider Buys: CVS, Dominion

Stocks in this article: CVSDTWX

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) -- Inside information pays. Corporate insiders usually have access to material nonpublic information about their companies. They sometimes trade illegally on such information and make great profits. Some of them were investigated, caught and sent to jail, but there are still many other insiders trading in the gray area and they never get caught.

In fact, insiders do not have to act directly on material nonpublic information to benefit from it. They can delay their purchases if they know negative news is about to be released. On the other hand, ordinary investors who do not have access to inside information will still buy the stock and lose money. As you might have guessed, imitating insider purchases is potentially a very profitable strategy. Academic studies have also shown that insider purchases manage to beat the market on the average.

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In this article, we are going to discuss the large-cap stocks that insiders are buying recently. All companies have at least $10 billion market cap and were purchased by at least one insider over the past two weeks.

CVS Caremark (CVS): CVS was bought by one insider over the past 10 days. On Feb. 13, Per G.H. Lofberg, EVP and president at CVS, purchased 46,400 shares of CVS at $42.99 per share. CVS closed at $44.01 on Feb. 21, up 2.4% from the price at which Lofberg purchased.

During the same period, the S&P 500 Index returned 0.82%. CVS is also a popular stock among hedge fund managers. At the end of the third quarter, there were 41 hedge funds with CVS positions in their 13F portfolios. Billionaire Warren Buffett's Berkshire Hathaway had nearly $300 million invested in CVS at the end of last year. Jacob Gottlieb, David Einhorn, and Bill Miller's Legg Mason were also bullish about CVS.



We are optimistic about CVS. We believe that the company is going to gain additional market shares and continue to be the industry leader. We also see robust revenue and earnings growth in CVS.

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