When executives of a company step in and buy its stock, it can provide a glimpse into an overlooked or misunderstood value opportunity.
Sadly, these insiders are often lousy market timers. They tend to acquire shares after a stock has lost a lot of value (even as they think the company's operating outlook remains bright). In many instances, the selling pressure isn't yet finished, and these insiders simply jumped in too soon. The good news: you can profit from their bad timing by picking up shares at lower prices than what insiders paid for them.
You can find a clear example of this with advertising firm MDC Partners (Nasdaq: MDCA), which is a member of my $100,000 Real-money Portfolio. Insiders have been buying this stock for an extended period, even as it has drifted ever-lower.
I think this stock is a deep bargain for its own intrinsic reasons, and those rounds of insider buying at much higher levels give me that much more confidence.
Here are three other attractively-valued stocks that are now much cheaper than what insiders paid for them.
1. Halozyme Therapeutics (Nasdaq: HALO)
I wrote about this stock in mid-April right after it was crushed. Halozyme is pursuing a range of drug-development opportunities with major pharmaceutical firms, so the recent pullback could present a solid buying opportunity.
NEW TIME Today, at 9:30 AM PT: Get the Market Movements in Advance: William's Edge Webinar for November 21st, 2014 | John Ransom
NEW TIME Today, at 9:30 AM PT: Get the Market Movements in Advance; Williams Edge Webinar for November 17th, 2014 | John Ransom