One of the primary goals of Stockpickr.com is to allow everyday investors to see what the "savvy pros" 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 investment.
But then you also have situations in which a company insider or board member is buying up shares on the open market. As Jim Cramer often points out, insider selling happens all the time for many different reasons, but insiders only buy for one reason: They think their stock is going higher.
To that end, we at Stockpickr keep track of and update each Thursday the
, a list of 10 stocks that in the past week have seen either big insider purchases or newly announced buybacks, as well as super investors accumulating shares.
makes this week's portfolio. The Santa Clara, Calif., chipmaker recently announced a new $2 billion stock buyback program, which could amount to 25% of outstanding shares, including the final part of its existing program. The company also announced late last week that its revenue slide will end this quarter.
The company reported that fourth-quarter profit fell year over year, but it did beat analyst expectations, which sent shares skyrocketing. A nice win on the earnings front combined with the share buyback has investors once again looking hard at National Semi.
"We believe that the leveraged share repurchase program is an effective way to improve the company's capital structure, and it reflects management's confidence in National's robust business model and future growth prospects," said CEO Brian Halla.
Standard & Poor's upgraded the stock to buy from neutral, saying that National Semi's strong forecast on top of margin improvement and the recently announced buyback puts the company in a great position. It also lifted its target price to $32 from $27.
Another analyst, Tore Svanberg of Piper Jaffray, pointed out that "now they're not just viewed as a value stock. They're not just leveraging gross margin but accelerated revenue growth."
Further boosting National Semi's story is the fact that
is a believer in the stock. Relational is a fund managed by longtime activist investor Ralph Whitworth. Founded in 1996, the fund has $6 billion in assets under management, most of which are from its seed-capital provider, the California Public Employees' Retirement System, as well as other pension funds.
Relational is run like a hedge fund, but unlike most it charges only a 1% management fee and gets paid only the standard 20% incentive fee on returns above what the
, the fund has averaged 18.7% a year since its inception. For the rest of Relational's holdings, including
, check out the
Among National Semi's other investors is the
(FDVLX), a fund that normally invests in what it considers deep value opportunities. The fund has returned 14.5% annually over the past five years. In its 2007 Fund Survey,
picked this fund as one of its "Best Buys for a Balanced Fund" in 2007, using various criteria, such as fund expenses, diversification and returns.
So with National Semi, we have a buyback, an upgrade including increased price target and two well-known value investors in the stock. It may be time to take a closer look.
Moving on, the first reason we looked at
, another Santa Clara-based company, was because we saw that Michael Marks, a board member, recently purchased 200,000 shares, or about $1 million worth of stock. This was the software company's largest insider purchase in nearly three years.
Sun Micro recently announced weaker-than-expected third-quarter numbers, but it did post its second quarterly profit in a row, which is a first in more than six years. On top of this, the company announced a $3 billion buyback program in mid-May.
"With over $5.4 billion in cash and marketable debt securities, we have maintained a strong balance sheet and feel confident that this program will allow us to further pursue strategic opportunities for growth," said CFO Michael Lehman in a statement.
Bear Stearns analyst Andrew Neff said that the recent downdraft in Sun's stock price presents a nice buying opportunity, because he "believes that its outlook may still be conservative given new products, cost focus and better execution." He has an outperform rating on the stock.
It also never hurts to see that the greatest hedge fund ever,
, owns Sun. Renaissance Technologies is a New York-based hedge fund started by Jim Simons in 1982. Its $5 billion Medallion Fund has averaged 35% annual returns, after fees, since 1989 and is considered in the industry to be the most successful hedge fund ever, yielding returns 10 percentage points higher than legendary investors
Because it is so successful, Renaissance charges a 5% management fee and a 44% incentive fee. Simons also owns
Johnson & Johnson
It is also interesting to note that Sun made the cut as one of the
as of the end of May, which could add to a nice up move. Other stocks on this list include
Level 3 Communications
So with Sun Micro, we have a board member recently buying shares, an enormous buyback program, an analyst who likes the stock at these levels and the greatest hedge fund ever invested in the stock. It's time to take a close look at Sun at these levels.
Next on the list is
. The Memphis, Tenn.-based auto parts retailer recently announced that it added $500 million to its stock buyback program. The additional $500 million in shares boosts AutoZone's total buyback authorization to $5.9 billion. This translates into a whopping 65% of outstanding shares.
AutoZone recently announced a solid fiscal third quarter with profits jumping 5% on increased sales and margin improvements. The buyback program certainly helped boost earnings-per-share numbers, but the company continues to work on supply-chain efficiencies.
At the beginning of 2007, super investor Mario Gabelli noted in his
that AutoZone was one of his picks primarily because of its enormous buyback program. Other picks of his included
However, it is great to see that someone as skilled and highly regarded as
invests in AutoZone, especially considering that he does not own many stocks.
Lampert is a focused investor whose
has reportedly returned 30% annually since inception more than 10 years ago. Lampert has been in the news recently due to rumors that he is looking to raise an additional $3 billion to $5 billion for ESL. Many consider Lampert to be the next
, so piggybacking Lampert is not a bad idea. Nor is it a bad idea to consider a stock such as AutoZone, which offers an enormous buyback coming off a solid quarter.
To see the rest of this week's picks, check out Stockpickr's
For more insight into Stockpickr's Guide to Insider Purchases and Stock Buybacks, you can review each of the last few weeks' picks by visiting these portfolios:
- Top 10 Insider Purchases and Buybacks I
- Top 10 Insider Purchases and Buybacks II
- Top 10 Insider Purchases and Buybacks III
- Top 10 Insider Purchases and Buybacks IV
- Top 10 Insider Purchases and Buybacks V
- Top 10 Insider Purchases and Buybacks VI
- Top 10 Insider Purchases and Buybacks VII
You can also review
from the prior week as well as 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 Stockpickr 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 several quantitative-based hedge funds as well as a fund of hedge funds. He is also 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;
to send him an email.
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