12 Bargain Stocks With Insider Support
Trouble is, soon after insiders buy, a stock starts to rise higher as other investors follow the insiders' lead. By the time you get around to researching that stock, it may already be 10% or 20% above the level where insiders bought in.
Yet it works the other way as well. Share prices sometimes fall after insiders have started buying, to below levels where they bought in. If insiders liked the stock when it was a bit higher, they presumably love it now that it's a bit cheaper.
Here are a dozen companies that are trading below the recent average insider purchase price. If the market grinds lower and pulls these stocks down further, insiders may lend their support once again.
Let's take a closer look at five of them .
Heading up the list is fast-food operator Wendy's(WEN) . Nelson Peltz and other key investors (known as insiders as they each control more than 5% of company stock, sit on the board and are privy to insider information) have been trying to unlock value at Wendy's for many years.
Roughly a half decade ago, they brought roast beef food chain Arby's into the mix, figuring that the combined entity could reap major synergies in terms of cost-savings from shared overhead. That strategy failed miserably, and Arby's was sold off in 2011. Peltz and others then sought to rejuvenate the core Wendy's brand by bringing in restaurant industry veteran Emil Brolick to run the show. He had considerable success at rival Yum! Brands (YUM) , and since he took the reins at Wendy's, has announced a far-reaching set of goals to spruce up stores and upgrade the menus.
Peltz and his cohorts liked the new plan so much that they ponied up more than $100 million to buy even more company stock in recent weeks. Trouble is, Brolick's plans call for heavy spending now, with (hoped for) rewards in 2013 and beyond. And you know how Wall Street hates to hear that spending is rising and profits will be falling. So they're pushed the stock down to levels below where Peltz and friends were buying.
Still, these insiders' far-sighted investment plans may eventually pay off in a big way as this stock is far, far cheaper than McDonald's(MCD) stock by a range of metrics. GeoEye