12 Pharmaceutical Stocks the Insiders Are Buying

Before you go, we thought you'd like these...
Before you go close icon

When insiders buy shares on the open market, their companies could enjoy bullish times ahead. Corporate insiders often have the inside track on their companies' prospects and often have significant exposure to the company's stock through options or restricted shares that are part of their compensation. Besides, insiders probably wouldn't risk plowing too much of their own money into their own company's stock -- reducing their portfolio's diversity, and increasing its risk -- unless they thought the stock will rise.

With that in mind, I screened for companies where at least one insider made an open-market buy in the past 30 days. These 12 pharmaceutical stocks made the list.

Security

Net Number of Buys

Number of Shares Bought

Total Value

Market Cap (Millions)

Valeant Pharmaceuticals International (NYS: VRX) 12248,645$6,460,000$12,622
ViroPharma (NAS: VPHM) 1249,983$4,150,000$1,405
Merck (NYS: MRK) 247,800$1,520,000$99,202
Mylan (NAS: MYL) 425,612$290,000$8,461
Optimer Pharmaceuticals (NAS: OPTR) 230,000$262,000$398
Impax Laboratories (NAS: IPXL) 311,500$215,000$1,219
Johnson & Johnson33,000$191,000$176,095
Xenoport18,166$49,000$268
Sagent Pharmaceuticals12,000$40,000$574
Pfizer12,000$36,000$144,261
Salix Pharmaceuticals1690$21,000$1,847
ISTA Pharmaceuticals (NAS: ISTA) 24,000$17,000$214

Source: Capital IQ, a division of Standard & Poor's, as of Aug. 17, 2011.

When it comes to the number and total value of insider open-market buys, more can be better; I've sorted this table accordingly. Insiders at Valeant made 12 open-market purchases worth $6,460,000, while one insider buy at ISTA was worth only $17,000. Both are bullish signs, but the Valeant purchase looks more promising. What's more, it's not the first large insider buy of the stock this year. Shortly after a large June insider buy, the company received FDA approval on a new epilepsy drug.

Foolish takeaway
Insider buying signals that someone who should be in the know is betting that the stock will rise. You can use this list of recent insider purchases as a starting point for further research -- or a good reason to make a contrarian play.

Are these insiders right? To help you find out, The Motley Fool recently introduced a free My Watchlist feature. You can get up-to-date news and analysis by adding companies to your Watchlist now:

At the time this article was published Fool contributorCindy Johnsoncurrently owns no shares of any stock in this story. The Motley Fool owns shares of Johnson & Johnson. Motley Fool newsletter services have recommended buying shares of Johnson & Johnson and Pfizer and creating a diagonal call position in Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners