Trend Report: 7 Insider and Hedge Fund Stock Picks to Consider

Mary-Lynn Cesar, Kapitall: Insider and hedge fund stock picks don't always overlap, but when they do it makes for an interesting list.

The following stock list is all about the investment habits of others. We're not talking about regular investors — we're focusing on insider and hedge fund stock pickers because they're among the most knowledgable investors out there.

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Insiders are company employees and have valuable insight into their firm that other investors lack. They also are more familiar than most people with the industry, their competitors, and the demand for their goods and services. When these insiders decide to buy stock based on what they know about a company, their actions are either insider trading (illegal) or insider buying (legal).  

The nature of the information driving the investment marks the difference between the two. Insider trading uses privileged information that has yet to be disclosed while insider buying relies on public information and a strong belief that the company is undervalued.

Insider buying shows that company employees are bullish about the stock's future, so we began today's screen by constructing a universe of stocks with net insider buying in excess of 2% of share float over the past six months.

Next, we took a look at the habits of institutional investors. These investors pool tons of money together, which they then invest in securities and other financial assets. They employ experienced analysts who maintain a comprehensive understanding of the economic landscape and a company's finances. This allows the analysts to evaluate earnings potential and future growth in a way that a regular investor likely can't. Hedge funds, insurance companies, mutual funds, and pension funds are examples of these big money investors.

Therefore, when these investors buy a considerable amount of a company's stock, they also expect the stock to outperform in the future. We screened our list for stocks with significant net institutional purchases over the last quarter representing at least 5% of share float.

We were left with seven insider and hedge fund stock picks on our list.

The List

Click on the interactive chart below to see average analyst ratings over time.

Do you believe in the upside potential of these insider and hedge fund stock picks? Use this list as a starting point for your own analysis.

1. JAKKS Pacific, Inc. ( JAKK): Designs, produces, markets, and distributes toys and consumer products worldwide.

Market cap at $129.33M, most recent closing price at $7.23.

Net institutional purchases in the current quarter at 3.4M shares, which represents about 22.74% of the company's float of 14.95M shares.

Over the last six months, insiders were net buyers of 858,580 shares, which represents about 5.74% of the company's 14.95M share float.

 

2. EnteroMedics, Inc ( ETRM): Focuses on the design and development of devices that use neuroblocking technology to treat obesity and associated co-morbidities, and other gastrointestinal disorders.

Market cap at $146.69M, most recent closing price at $2.37.

Net institutional purchases in the current quarter at 4.1M shares, which represents about 10.37% of the company's float of 39.55M shares.

Over the last six months, insiders were net buyers of 2,250,000 shares, which represents about 5.69% of the company's 39.55M share float.
 

3. Endeavour International Corporation ( END): Engages in the acquisition, exploration, development, and production of crude oil and natural gas in the United States and the United Kingdom.

Market cap at $230.75M, most recent closing price at $5.14.

Net institutional purchases in the current quarter at 2.9M shares, which represents about 10.06% of the company's float of 28.83M shares.

Over the last six months, insiders were net buyers of 691,390 shares, which represents about 2.4% of the company's 28.83M share float.
 

4. Molycorp, Inc. ( MCP): Focuses on the production and sale of rare earth oxides from stockpiled feedstocks in the western hemisphere.

Market cap at $904.45M, most recent closing price at $5.21.

Net institutional purchases in the current quarter at 21.5M shares, which represents about 11.56% of the company's float of 185.99M shares.

Over the last six months, insiders were net buyers of 15,016,700 shares, which represents about 8.07% of the company's 185.99M share float.
 

5. Parkway Properties Inc ( PKY): Engages in the operation, acquisition, ownership, management, and leasing of office properties.

Market cap at $1.23B, most recent closing price at $18.13.

Net institutional purchases in the current quarter at 3.7M shares, which represents about 7.6% of the company's float of 48.67M shares.

Over the last six months, insiders were net buyers of 5,876,000 shares, which represents about 12.07% of the company's 48.67M share float.
 

6. MannKind Corp. ( MNKD): Focuses on the discovery, development, and commercialization of therapeutic products for diabetes and cancer.

Market cap at $2.21B, most recent closing price at $6.48. 

Net institutional purchases in the current quarter at 13.3M shares, which represents about 7.46% of the company's float of 178.40M shares.

Over the last six months, insiders were net buyers of 39,896,322 shares, which represents about 22.36% of the company's 178.40M share float.

 

7. Western Gas Partners LP ( WES): Engages in the acquisition, ownership, development, and operation of midstream energy assets in east and west Texas, the Rocky Mountains, and the Mid-Continent.

Market cap at $6.96B, most recent closing price at $62.17.

Net institutional purchases in the current quarter at 4.6M shares, which represents about 7.94% of the company's float of 57.97M shares.

Over the last six months, insiders were net buyers of 8,748,224 shares, which represents about 15.09% of the company's 57.97M share float.

 

 

( List compiled by Mary-Lynn Cesar, a Kapitall Contributor. Analyst data sourced from Zack's Investment Research. Insider data sourced from Yahoo! Finance. Institutional data sourced from Fidelity. All other data sourced from Finviz.)

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