Updated from 6:59 a.m. EDT
One of the primary goals of Stockpickr.com is to allow everyday investors a look at what the big guns are buying. Often 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.
But when that same company announces that an insider has purchased a large chunk of stock or, even better, the board announces a new large share-buyback program, that usually seals the bullish case for the stock.
As Jim Cramer often points out, insider selling happens all the time for many different reasons, but insiders buy for only one reason: They think their stock is going higher.
That's why each Thursday at Stockpickr we update the
portfolio, featuring stocks that have had either big insider purchases or newly announced buybacks as well as super investors accumulating shares.
is in this week's portfolio. Thesupermarket chain based out of Pleasanton, Calif., announced that itwill add $1 billion to its buyback plan. Since the program'sbeginning, Safeway's board has authorized a total of $5 billion forbuybacks. To date, the company has spent $3.55 billion repurchasingcommon stock and has $1.45 billion remaining.
The leading food retailer also announced that it raised its quarterlydividend to 8.28 cents a share from 6.9 cents a share, an increase of20%.
Safeway reported first-quarter profit of $193.4 million, or 44 cents ashare, an increase of 11% from $174.4 million, or 39 cents a share, inthe same period last year. The Easter holiday and high fuelconsumption helped total sales jump 7.3% to $10 billion. During thequarter, the company spent $74.1 million repurchasing 2.5 millionshares.
Steve Burd, chairman, president and CEO, added: "Our efforts to reduceand control costs contributed to operating margin improvement. At thesame time, we invested in lower prices to improve our competitivenessand enhance our consumer offering. We remain confident in our abilityto deliver earnings per share growth in the 13%-18% range for this 53-week year."
The grocery store also said that if its Club Card members cash intheir economic stimulus checks at Safeway stores, then that customerwill receive a 10% discount on purchases made in the store.
It's also good to see that
Third Point LLC is investing in Safeway. This$5.5 billion hedge fund ran by Daniel Loeb has posted anaverage annual return of 28.9% since Loeb founded the firm in 1995.Loeb is well-known in the hedge fund world for his attacks on what heviews as greedy executives who also happen to be depressingshareholder value. His other new positions are
Another noteworthy fund into Safeway is
Highbridge Capital Management. Withover $7 billion in assets, the global hedge fund specializes in nontraditional investment strategies. JPMorgan Asset Management formed astrategic partnership with Highbridge by purchasing a majorityinterest in the firm in December 2004. They also own
So we have a buyback, an inflated dividend, a solid first quarter andtwo highly regarded investment firms into the stock. That makesSafeway worth considering.
also makes this week's list. The maker ofbleach, Armor All, Glad bags and Britta water filters said that itwill repurchase up to $750 million in common stock. The company willbuy back shares on a time-to-time basis, depending on marketconditions. According to the last earnings report, Clorox hasapproximately 140.3 million shares outstanding.
The Oakland, Calif.-based company also announced that it will increaseits quarterly dividend 15% to 46 cents a share.
Clorox recently reported that third-quarter profit dropped to $100million, or 71 cents a share, from $129 million, or 84 cents a share, inthe same period last year. This profit drop of 23% was due to theacquisition of Burt's Bees and high commodity costs, said thecompany. Revenue for the quarter, which surpassed analysts'expectations, increased to $1.35 billion from $1.24 billion, a gain of9%. North American sales grew 8% while international sales jumped14%.
"Total company and base business sales growth were strong, especiallyconsidering our very high level of growth in the year-ago quarter,"said Chairman and CEO Don Knauss. "Our market shares held steadydespite the economic pressures consumers are facing."
BMO Capital Markets has an outperform rating on the stock and expectsit to be trading at the $72 level. The analysts like thebuyback decision because it will offset options dilution. Also, thedividend increase will place the stock in the upper end of theindustry's dividend payout ratio, at 57%.
It's always good to see that
is interested in the stock. This $5 billion investment fund has averaged 38% annual returns since 1989 and is considered in the industry to be the most successful hedge fund. Its other stock picks are
, founded in 1977, is another major global investment firm that holds Clorox in its portfolio. The firm manages $127 billion (85% equities) in client assets using a blend of traditional judgments with innovative quantitative methods to find undervalued securities and markets. It is also buying
With a buyback, increased dividends, a buy rating with a huge price target, and two well-known investors into the stock, Clorox is another one worth taking a look at.
For more stocks and analysis, check out this week's
For the 10 most recent portfolios, check out:
- 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
- Top 10 Insider Purchases and Buybacks XLVII
- Top 10 Insider Purchases and Buybacks XLVIII
- Top 10 Insider Purchases and Buybacks XLIX
- Top 10 Insider Purchases and Buybacks L
- Top 10 Insider Purchases and Buybacks LI
You can also review
from the prior week and Jim 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
and the author of
Trade Like a Hedge Fund
Trade Like Warren Buffett
. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Altucher appreciates your feedback;
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