When a company announces a quarterly shortfall and lowers
guidance, investors have been known to shoot first and ask
That lesson was painfully brought home to the insiders at
Maxwell Technologies (Nasdaq: MXWL)
, who were initially stunned to see the company's stock tumble from
about $20 in late winter to below $10 by late April. The quick
reaction: On April 29,CEO Mark Rossi and director David Schramm
acquired a total of 25,000shares of company stock on the openmarket
They should have saved their money.
In subsequent days, investors kept on selling this stock,
pushing it down to roughly $6 by late July. Undeterred, those two
insiders, along with two others, have continued to buy and with
shares finally on the mend, they are looking a bit wiser.
I added this stock to my
$100,000 Real-Money Portfolio
and thanks in part to that additional insider buying, am sitting on
a tidy 35% gain. (That has helped push the whole portfolio into the
black for the year, for which I say "Amen.")
Where to from here? I'm convinced this steadfast commitment from
these insiders will really pay off. That's because Maxwell looks
poised to resume its impressive growth trajectory -- once it can
get past a few more difficult year-over-year comparisons. The
company is benefiting from the long-term adoption of its innovative
ultra-capacitors, and you can expect to see additional new
customers sign up for these products -- especially in the auto
industry -- in the months to come.
Yet Maxwell is not alone when it comes to the intestinal
fortitude of insiders.
Calgon Carbon (
is another portfolio holding that is seeing steady insider buying.
Insiders began purchasing shares in late August at $13.39 a share,
and they've kept buying as shares moved up above $14. To read why I
see considerable upside for this environmental-services company,
Here are two other stocks that are the beneficiary of repeated
1. YRC Worldwide (Nasdaq: YRCW)
This beleaguered trucking firm had to conduct a 44-for-1
reversestock split last December just to keep its listing on
Nasdaq. Shares eventually slid below $5 this past spring, leading
some to wonder if even that reverse split wasn't enough to stem the
Insiders knew better. They began purchasing company stock in the
$5.20 to $5.40 range in early August and have been buying at even
higher prices. That translates to $200,000 from five different
Those moves are paying off as shares of YRC are now moving up
again, recently approaching $7. YRC's management spoke at a recent
Deutsche Bank conference and discussed efforts to turn around what
had been a broken business. A steady drop in expenses, led by a
reworked union contract was a key part of the presentation, which
could explain this stock's recent rebound.
2. Dole Food Co. (Nasdaq: DOLE)
David Murdock has a long history with this fruit andreal estate
concern. He bought the company out of bankruptcy in 1985, parlayed
that investment into an estimated $3 billionnet worth , took the
company private in 2003 and went theIPO route again in 2009. That
move was looking like a dud earlier this year as shares drifted
down toward the $8 mark, the lowest levels seen in this round as
apublic company .
Murdock was not deterred. He began snapping up shares in July,
and has kept doing so ever since. In fact, from late July through
mid-August, he was a buyer in the open market almost every day. In
all, he's bought more than $45 million in company stock during the
past six weeks.
What is Murdock up to? Well, he's been working with Dole's board
to find ways to unlock shareholder value, and presumably believes
investors don't fully appreciate the steps yet to come. Among the
company's options: an outright sale of its Packaged Food business,
a sale of Dole's Asian Fresh Fruit business, or perhaps other
assets that will be put up for sale. The company has said it would
announce its plans by the end of the year. The fact that the bulk
of Murdock's buying has come in the $12.50 range, not far from
current levels, tells you that he spots ample more upside.
In the past few days, Dole has confirmed that talks have begun
for the sale of various divisions. Shares have moved up to the $14.
Merrill Lynch predicts a deal will be consummated and figures Dole
could trade up to $17 a share, after any partialasset sales take
Risks to Consider:
Insiders have keen insights into their businesses but have a
poor track record of timing the stock market. So the recent gains
for these stocks, even though they portend better days ahead, could
still be disgorged in the near-term, if the markets pullback.
Action to Take -->
"Buying on the way up" is a phrase that analysts who follow
insiders like to use. If insiders keep buying company stock, even
after it starts to rise, then the chances are good that even more
upside lies ahead.
-- David Sterman
David Sterman does not personally hold positions in any
securities mentioned in this article. StreetAuthority LLC does not
hold positions in any securities mentioned in this article.
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