Top Stocks With Insider Buying, Buybacks
Updated from 6:59 a.m. EDT
One of the primary goals of Stockpickr.com is to allow everyday investors to see what the big guns are buying. Often times, we see a big-name investor loading up on a particular stock. This is usually a good sign because you know that person put a lot of time and due diligence into that process. Plus, high-profile investors have bankers, lawyers and consultants breaking down the business every which way imaginable.
The real icing on the cake, however, is when that same company announces that an insider has purchased a large chunk of stock or even better, the board initiates a new, large share-buyback program.
That's why each Thursday at Stockpickr we update the
Top 10 Insider Purchases and Buybacks
portfolio, featuring the stocks that in the last week had either big insider purchases or newly announced buybacks, as well as super-investors accumulating shares.
For instance,
Fortune Brands
( FO) makes this week's portfolio. The maker of Jim Bean whiskey and Titleist golf products on March 31 said it will buy back $15 million in common stock. Fortune Brands' decision to increase its investment in its own stock came after the company decided not to buy Vin & Spirit Group, the maker of Absolut vodka.
Fortune Brands CEO Bruce Carbonari wanted to buy Absolut but felt that the offer price was too high. In a statement he said, "We didn't see the appropriate return for our shareholders at the announced price, so we preserved our financial flexibility to create significant value in other ways." This is characteristic of the company's disciplined approach to mergers and acquisitions.
It's also great to see that analysts at Robert Baird recently reaffirmed their outperform rating on the stock and raised their estimates and price target. The price target was lifted to $84 from $80 while 2008 EPS estimates were increased to $5.75 from $5.15. The analysts added that losing the bid for the Absolut vodka maker will be beneficial since the company can use the extra cash for share repurchases.
Another reason to like Fortune Brands is because one of the industry's most successful hedge funds,
, is buying shares. Although the fund is highly secretive, we know it also invests in
Lockheed Martin
(LMT) - Get Report
and
Kellogg
(K) - Get Report
.
It's also good to see that the
believes in Fortune Brands. The firm also holds shares of chemical producer
Huntsman Corp
(HUN) - Get Report
and building materials maker
Owens Corning
(OC) - Get Report
.
So with Fortune Brands, we have a buyback, an outperform rating with increased targets and two top-of-the-line investors betting on the stock. It may be time to take a closer look.
Next on the list is
Sempra Energy
(SRE) - Get Report
. The San Diego, Calif., energy services holding company last week initiated a $1 billion buyback plan. Sempra Energy and
The Royal Bank of Scotland
(RBS) - Get Report
teamed up to form a commodities-marketing joint venture and will use the proceeds, which total more than $1 billion, from the RBS transaction to finance the buyback.
The buyback, which is expected to be completed in the fourth quarter of 2008, is the initial portion of the company's plan to repurchase between $1.5 billion and $2 billion in common stock.
The company, which has more than 29 million consumers worldwide, also increased its annual divided rate by 9% to $1.40 a share from $1.28 a share. Sempra plans to maintain a dividend payout ration between 35% and 40% of net income.
Another bullish note for Sempra Energy is that analysts at UBS upgraded the stock to buy from neutral and increased their target price from $58.50 to $64. In their report, the analysts mention attractive valuation and short- and long-term catalysts coming from the completion of the RBS-Sempra joint venture. UBS also said the company has the ability to further rebalance its capital structure after 2010.
Analysts at Wachovia also reiterated their outperform rating on the stock and said that impressive long-term earnings growth provides a cushion for unexpected events, which are not uncommon in the natural gas industry. Wachovia sees the stock trading between $65 and $68.
We also like to see that
is bullish on Sempra Energy. This $26 billion firm screens stocks that are in the most undervalued or "deep" value portion of their universe based on normal earnings. It also holds shares of
Citigroup
(C) - Get Report
and
Wal-Mart
(WMT) - Get Report
.
Another noteworthy investor that likes Sempra is Steven Cohen, who runs the $12 billion group of hedge funds at
. His fund recently bought positions in
CVR Energy
(CVI) - Get Report
and
Assured Guaranty
(AGO) - Get Report
, while he just sold out of
Yum! Brands
(YUM) - Get Report
.
So with Sempra, we have a buyback, solid growth forecasts, an upgrade and increased price targets as well as two legendary investors in the stock. That's a solid foundation for this stock to take off.
And finally, we have
Western Digital
(WDC) - Get Report
making this week's list. The Lake Forest, Calif.-based hard-drive producer last week added $500 million to its buyback program. Over the last four years, the company has repurchased $250 million in common stock.
On Jan. 23, the company delivered strong fiscal second-quarter earnings with revenue of $2.2 billion propelled by a 46% increase in hard drive sales. Net income was $305 million, or $1.35 a share, a 137% gain over net income of $128 million, or 57 cents a share, in the same period last year. The company next reports quarterly results on April 24.
Analysts at Thomas Weisel Partners reiterated their overweight rating on the stock and awarded it with a huge target price of $46. They mention the company's strong position in notebook computers and external hard disk drives and they expect the company to experience above-peer EPS growth.
Adding to the bullish case for the stock is that
is betting on Western Digital. The firm, which manages about $7.4 billion in assets, also invests in
Foster Wheeler
(FWLT)
and
Winn-Dixie Stores
( WINN).
Another all-star fund that owns Western Digital shares is
. This five-star Morningstar-rated fund also holds
Pfizer
(PFE) - Get Report
and
AT&T
(T) - Get Report
.
So with Western Digital, we have a buyback, great earnings, an overweight rating and two well-known investors into the stock. It may be time to do some more homework on this stock.
For more stocks and analysis, check out this week's
Top 10 Insider Purchases and Buybacks
at Stockpickr.com.
For the 10 most recent portfolios, check out:
- Top 10 Insider Purchases and Buybacks XXXVIII
- Top 10 Insider Purchases and Buybacks XXXVIII
- Top 10 Insider Purchases and Buybacks XXXVIX
- Top 10 Insider Purchases and Buybacks XL
- Top 10 Insider Purchases and Buybacks XLI
- Top 10 Insider Purchases and Buybacks XLII
- Top 10 Insider Purchases and Buybacks XLIII
- Top 10 Insider Purchases and Buybacks XLIV
- Top 10 Insider Purchases and Buybacks XLV
- Top 10 Insider Purchases and Buybacks XLVI
You can also review
Barron's Top Insider Purchases
from the prior week as well as Cramer's
.
At the time of publication, Altucher and/or his fund had no positions in stocks mentioned, although positions may change at any time.
James Altucher is president of
LLC, a wholly owned subsidiary of TheStreet.com and part of its network of Web properties, and a managing partner at Formula Capital, an alternative asset management firm that runs a fund of hedge funds. He is also a weekly columnist for the
Financial Times
and the author of
Trade Like a Hedge Fund
,
Trade Like Warren Buffett
and
SuperCa$h
. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Altucher appreciates your feedback;
to send him an email.
TheStreet.com has a revenue-sharing relationship with Trader's Library under which it receives a portion of the revenue from purchases by customers directed there from TheStreet.com.