You're Not the Only One Buying Here
Famed money manager Peter Lynch told us executives can sell their stock for any reason, but typically buy for only one: They think the price is going to go up!
Today, I've highlighted two insiders who've recently made big purchases of their own company's stock. These aren't option grants but rather are insiders putting their own money on the line, buying shares at market prices just like you and me.
I then paired that information with insights from the members of Motley Fool CAPS to see whether they think the stock has the same prospects the insiders do.
Market Value of Transactions
CAPS Rating (out of 5)
|SeaChange International (NAS: SEAC)||Peter Feld, director||$1.2 million||****|
|Sunrise Senior Living (NYS: SRZ)||Carson Capital, 10% owner||$1.7 million||**|
Source: Company filings.
Although following the lead of insiders can be profitable, we still recommend you do further due diligence to determine whether these stocks ought to be sold from your own portfolio -- or would make a good addition! So this isn't a list of stocks to sell or buy, but just the inside track on companies you might want to check out further.
Higher and higher?
As my Foolish colleague Anders Bylund notes, there's a sea change of opportunity available to video-on-demand software provider SeaChange International, which is shedding its hardware business in favor of a new software-only model. The lower cost structure should help it improve its profitability down the road, but only if it isn't crowded out of an already burgeoning market.
It's not as if the competition hasn't already figured out that VOD is the future. While SeaChange provides cable operators like Cablevision (NYS: CVC) and telecoms such as Verizon with VOD services, so do larger and better-financed rivals like Arris (NAS: ARRS) and Cisco (NAS: CSCO) , which saw its cable-oriented service provider video unit achieve 23% growth last quarter, much better than analysts suspected, considering the dour reports coming out of the industry.
Now SeaChange has new management on board that's changing the direction the services provider is heading; the team that has roots connecting it to those who directed the sale of AOL's patents to Microsoft. That's a smart leadership team not to be discounted, but there are significant hurdles before SeaChange that might make the transition more difficult than it otherwise appears.
But the insider buying is indicative of confidence, and the CAPS community remains supportive, with 96% of those rating the VOD software provider to outperform the market indexes.
You can add SeaChange to your Watchlist to keep track of the transitions, and then let us know on the SeaChange International CAPS page whether you think the forces behind the shakeup have more ideas for change in mind.
No rest for the weary
Carson Capital hasn't really stopped buying shares of Sunrise Senior Living since I first highlighted it back in January, but it's recently gotten more aggressive as shares hit $6 a stub. As Motley Fool writer Ali Ghorbanzadeh notes, the private investment firm for high-wealth individuals now owns 14% of the nursing-home operator.
While takeover chatter was responsible for an uptick in its stock earlier this year, not much has been said recently, and although it managed to beat analyst expectations last quarter, Sunrise continues to sell off properties. Most recently, it struck an agreement with Ventas to sell 16 communities, and while its occupancy rates seem to have stabilized, I have to agree with Ali that this might not be the best opportunity in the field to put your money in. As Monroe7 says, Sunrise is pretty much a mess these days: "Has [a lot] of debt, no dividend, earnings are all over the place, and declining revenues."
Others think the discounted value of the shares makes it attractive still, but add Sunrise Senior Living to the Fool's free portfolio tracker to see whether this nursing-home operator can find a place to rest.
On the inside track
These two companies still have big hurdles before them, but discover two other small-cap stocks The Motley Fool found with state contracts that have the potential to deliver multibagger returns. This special report is free for the asking, but it's available for only a limited time, so ask for your copy today!
At the time this article was published Fool contributorRich Dupreyowns shares of Cisco Systems, but he holds no other position in any company mentioned. Check out hisholdings and a short bio. The Motley Fool owns shares of Cisco Systems and Microsoft.Motley Fool newsletter serviceshave recommended buying shares of Microsoft and creating a bull call spread position in Microsoft. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.