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Immelt Buys GE Stock to Underscore Value: Insider Profile

By Jonathan Moreland, founder of Insider Insights and author of Profit From Legal Insider Trading.

NEW YORK (TheStreet) -- General Electric (GE - Get Report) CEO Jeffrey Immelt made one of the more notable insider purchases filed with the Securities and Exchange Commission on Tuesday, using his cash bonus to buy GE shares, his Form 4 filing confirmed.

Mr. Immelt's $2.6 million purchase reinforces our Bullish +1 Insider Company Rating on shares of General Electric earned Feb. 27. Mr. Immelt and two other Directors (William Beattie and James Rohr) all filed Form 4s last week to record recent purchases of GE. That buying cluster ranked high enough to reach the most basic level of significance by our ratings methodology. The last time GE held a significantly bullish insider ranking was back in May 2012.

Tracking the trading behavior of company executives, directors and large shareholders in the stocks of firms they're registered in as "insiders" has proven to be profitable, according to both academic studies and (more importantly) the experience of professional investors.

Note that GE's present insider company rating is only +1, however, and not a higher +2 or +3 by our methodology. The reason for this is that the track records of the three acquisitive insiders are not particularly good. None of the three recent insider buyers have averaged gains with their past purchases of GE, and only Mr. Immelt has more than one past bullish transaction to have statistics on to begin with. Track records count when rating insider activity, and it's dangerous to rely on an insider's prowess based on a single transaction. Investors would be surprised at how many of those insider scores on various Web sites are based on just one trade. 

So although the recent insider purchases by Mr. Immelt and other GE executive may be comforting for current shareholders, GE was not one of the 15 stocks we've added to our newsletter or client's managed accounts in the past two weeks.

We use insider data as our first screen to determine where we focus our fundamental analysis, and we determined that numerous other insider-bought names in the biotech, financial, gaming, and energy sectors had at least as good risk/reward profiles, with more upside potential.  

Below are lists of the top 10 open-market insider purchases and sales filed at the SEC Tuesday, Mar. 4, 2014, as ranked by dollar value. Please note, however, that these are only factual lists, not buy and sell recommendations. Dollar value is only one metric to assess the importance of an insider transaction, and, frankly, often not even the most important metric that determines if an insider transaction is significant.

Insider Purchases
#: Filer Name Insider Titles Company Name Ticker Trans
Type
Dollar Value
1
BO
KCG
KCG
JB*
$66,000,000
2
BO
WES
JB*
$18,750,022
3
DIR,BO
WSH
B
$8,518,478
4
CB,CEO
GE
B
$2,642,431
5
VP
XON
B
$2,594,853
6
DIR
TTS
B
$1,487,219
7
DIR
JB*
$1,000,008
8
DIR,BO
B
$794,050
9
DIR
Tss
JB*
$491,228
10
DIR
PKG
B
$436,398

Source: InsiderInsights.com | Key to Insider Title and Trans Type Codes

Insider Sales
#: Filer Name Insider Titles Company Name Ticker Trans
Type
Dollar Value
1
BO
JS*
$419,318,752
2
BO
JS*
$419,318,752
3
CEO,DIR,BO
AS
$56,397,300
4
CB,CEO,PR
M
S
$34,153,132
5
BO
KCG
KCG
JS*
$33,000,000
6
DIR,BO
AS
$17,038,786
7
CEO,PR,DIR
S
$9,558,601
8
DIR
S
$9,451,703
9
CEO,DIR
AS
$7,566,121
10
DIR
AS
$6,601,308

Source: InsiderInsights.com | Key to Insider Title and Trans Type Codes


At InsiderInsights.com, we find new investment ideas every day using these and more intricate insider screens
to determine where we should focus our subsequent fundamental and technical analysis. And while stocks don't (or shouldn't) move up or down based on insider activity alone, insiders tend to be good indicators of when real stock-moving events like earnings surprises, corporate actions, and new products may be in the offing.

So use these regular Top Insider Trades columns as the initial research tools they are meant to be, and click the links in the tables to analyze a company's or insider's full insider history. Also feel free to contact us with any questions on our proprietary insider data, and how it is best analyzed.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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