At Stockpickr.com, we keep track of the Top 10 Insider Purchases and Buybacks each week. Part of the philosophy of Stockpickr is to follow in the footsteps of smart people. This could mean a few different things.
First, it could mean piggybacking great investors like Buffett or Soros. Other times it means buying what the CEOs, employees, and directors of a company are buying. These are people who know the intimate details of their companies far better than you or me. The perfect setup is when one of these company insiders or an entire board (in the case of a buyback) are buying shares as well as some smart savvy investors.
Each Thursday we update the Stockpickr
portfolio, featuring the 10 stocks of the week that had either big insider purchases or newly announced buybacks and also saw "smart money" accumulating shares.
is in this week's portfolio. The second-largest U.S. oil company said it will repurchase $15 billion worth of common stock over the next three years.
Over the last three years, the San Ramon, Calif.-based company has returned nearly $30 billion to shareholders through a prior $15 billion stock repurchase program as well as distributed $13.8 billion in common stock dividends.
Chevron's latest numbers revealed a 24% year-over-year jump in profits, understandable in light of rising crude oil prices that are currently over $80 per barrel. And just this week, the chief economist from CIBC commented that oil could hit $100 per barrel by the end of next year and remain above that point for the foreseeable future. "We're in a world of triple-digit oil prices for the foreseeable future," said Jeffrey Rubin at a recent conference. This should bode very well for CVX earnings going forward.
Another reason we are high on CVX is because
believes in the stock as well. Dreman is one of the greats and demonstrates his talent with a large-cap fund that has returned 17% annually since inception. The Web site for the fund states: "We believe that the markets are not perfectly efficient and that, in particular, behavioral finance plays a considerable role in investor actions and over-reactions and subsequently in stock price movements." This could be his view on CVX. Other holdings of Dreman include
Another notable investment firm that owns CVX shares is the
. The fund manager Silvio Tarca has delivered a Morningstar rating of 5 stars, and returns of 16% annually over the last three years.
So here we have a buyback, strong earnings, rising oil prices and two successful portfolio managers participating in this stock. It's time to take a closer look at CVX.
Next on the list is
Bed Bath & Beyond
. The Union, NJ based domestic-products retailer recently declared it will buy back $1 billion worth of stock on the completion of its current authorization.
Last week, the company also announced third-quarter earnings that edged out Wall Street expectations, sending shares higher. The company has continued to open up new stores, in spite of many market pundits predicting that softness in housing will hurt the retailer.
Wachovia analyst Ralph Jean is still optimistic on the stock and reiterated an "Outperform" rating, with a target price range of $40 to $45. He stated that the company "continues to outperform the industry and take market share from weaker competitors due to its compelling merchandise offerings and strong execution."
It was also good to see that
is a believer in the stock. Ahmet Okumus is a staunch disciple of the Graham and Dodd style of value investing. Okumus, over the last 17 years, has applied the principles of deep value investing in his research, security analysis and stock selection.
Okumus Capital has yet to have a down year and has been averaging 20%+ since its inception 10 years ago. His talent has been recognized by financial media and he was featured as one of America's top stock investors in Jack Schwager's book
"Stock Market Wizards." We like to see that an investor with such an impressive history likes BBBY. For the rest of Okumus' holdings, including
We were heartened to learn
also owns Bed Bath. His firm manages its trademark Sequoia Fund, known for one of the best long-term performance records on Wall Street. The fund was started in 1970 and has returned an astounding 16% annually since inception.
suggested long ago that The Sequoia fund be established so his partners and investors would have the opportunity to stay invested in the equity markets long after he closed his original hedge fund in the late 1960s.
Thus, BBBY meets our selected criteria with an increased buyback, a good quarter, a positive analyst note and two well-known investors in the stock. The stars seem to be in alignment for this stock.
We first became interested in
because the CEO Aubrey McClendon recently purchased 25,000 more shares worth nearly $1M. Plus, he has been buying up shares fairly consistently over the last few months.
The oil and natural gas company recently outlined plans to cut production and sell off some assets, which it hopes will generate nearly $3.5 billion in cash. This is the second year in a row the company is cutting drilling and production levels in response to falling natural gas prices.
"To protect the company's long-term shareholder value, we believe Chesapeake needs to respond to the current oversupply of natural gas and defer natural gas production and drilling activity until natural gas supply and demand come into better balance," Chief Executive Aubrey McClendon said in a statement.
JPMorgan analyst Joseph Allman noted that "current natural gas prices are unsustainable in the current service cost environment" and he believes Chesapeake is trying to do its part to balance the gas market. He rates the company "Overweight" and believes investors should consider the asset sales and cash it will produce to be positives for the company.
We were also glad to see that Chesapeake is also owned by
, the well-regarded investor who manages Southeastern Asset Management and its $31 billion in client and investment company assets. Aside from Chesapeake, his fund also counts
among its holdings.
Another notable investment firm that owns CHK shares is the
. This fund, managed by Joel Tillinghast, has a Morningstar rating of 5 stars and has returned 18% annually over the last three years. This manager also likes
Add it up and we have the CEO buying shares, assets sales generating nearly $3.5 billion in cash, a positive analyst report and two highly regarded funds in the stock. This stock deserves a spot on the radar screen.
To see the rest of this week's picks, check out Stockpickr's
And to take a closer look at Stockpickr's Guide to Insider Purchases and Stock Buybacks, you can review the last few weeks' picks by checking out these portfolios:
- Top 10 Insider Purchases and Buybacks XIV,
- Top 10 Insider Purchases and Buybacks XV,
- Top 10 Insider Purchases and Buybacks XVI
- Top 10 Insider Purchases and Buybacks XVII
- Top 10 Insider Purchases and Buybacks XVIII
- Top 10 Insider Purchases and Buybacks XVIX
- Top 10 Insider Purchases and Buybacks XX
- Top 10 Insider Purchases and Buybacks XXI
- Top 10 Insider Purchases and Buybacks XXII
- Top 10 Insider Purchases and Buybacks XXIII.
You can also review
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 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 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
. 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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