Bullish Trinity: Stocks With Short Covering, Insider & Hedge Fund Buying
When it rains, it pours. It's a saying we apply to our personal lives here and there when things get really good, or really bad. In this case, companies can apply it to their good fortune in investor trends. [Related List: 7 Biotechnology Stocks With Insider Buying Activity ]
We made a list of stocks that have signaled not one, but three promising trends that signal optimism among investors.
1. Insider Buying - If anyone knows what is going on with a company, it has to be the people that work there. But when insiders start to buy up shares of their company, there’s really only one good explanation: They think the share price is undervalued. If they're buying, then insiders are confident there is more upside potential, and might have a hunch their stock is going to rally. Of course, these predictions aren’t always realized, but it’s a strong indicator for outsiders to go by.
We screened for names showing net insider buying in the current quarter in excess of 1% share float.
2. Institutional Buying - Insider activity alone isn't enough to actually shift market prices. This day and age it's the work of hedge funds that make it their daily business to buy, sell and move millions of shares every day that really get share prices moving. But hedge funds pay attention to insiders too, so insider activity can set a spark that puts institutional buying (or selling) in action.
Like insiders, institutional sales are closely watched and reported. Here we screen for names showing significant net institutional buying in the current quarter, representing at least 5% of share float.
3. Short Covering - We screened for companies with a recent significant decreases in shares shorted. This signals optimism, or rather a lack of pessimism, from short sellers – a group of investors who benefit when share price falls.
We screened for names showing short covering month over month in excess of 1.5% share float.
The Final List
Four stocks made the final list. As this interactive (press play) 1-year return chart shows, their performance hasn't exactly been stellar. Could all this bullishness signal that a rebound is imminent?
1. Janus Capital Group, Inc. ( JNS): A publicly owned asset management holding company. Market cap at $1.81B, most recent closing price at $9.53.
Over the last six months, insiders were net buyers of 30,846,700 shares, which represents about 17.17% of the company's 179.68M share float.
Net institutional purchases in the current quarter at 22.3M shares, which represents about 12.41% of the company's float of 179.68M shares.
Shares shorted have decreased from 21.89M to 18.91M over the last month, a decrease which represents about 1.65% of the company's float of 180.29M shares. Days to cover ratio at 7.26 days.