At TipRanks we track four different types of financial expert- including 37,000 corporate insiders. This means that we can find out about the most recent corporate insider transactions from insiders with the best track record of success- and from that find the most compelling insider stocks to follow.
Crucially, we differentiate between two types of insider transaction informative and uninformative. Across all TipRanks’ insider tools you can filter out uninformative transactions which indicate that an insider is buying/selling shares for mostly insignificant reasons such as exercising expiring options. If an insider deliberately makes a transaction it is counted as an informative transaction- and can be a significant insight into how that insider thinks the stock will perform.
We used two specific tools to find insider stocks: Daily Insider Transactions and Insider’s Hot Stocks. As the name suggests, the Daily Insider Transactions tool displays all the most recent insider transactions. You can filter the transactions to find only the stocks that best match your investing strategy- and filter our poor-performing insiders. In this case, we selected the following options, and searched across all sectors:
The result of the search revealed these three stocks including Kite Pharma (KITE)- a company dedicated to treating cancer:
All three stocks have recent transactions worth millions of dollars from 4-5 star corporate insiders. For example, on May 9, David Bonderman bought $3.45 million shares worth of Kite Pharma stock bringing his total holding of KITE shares to $189 million. Bonderman- who has a very impressive average return of 25% per transactions- has holdings in a few different stocks that total $1 billion.
We can click on the stock ticker to see the market consensus on each of these stocks. If we go to Kite Pharma’s stock analysis page we can see that is has a Moderate Buy analyst consensus rating, but if we scan down the ratings we can see that five-star analyst Eric Schmidt from Cowen & Co published a Buy rating on KITE on May 8.
KITE shares tumbled nearly 13% to $70.99 in Monday’s trading session, after the drug maker announced a death from cerebral edema in its ZUMA-1 expansion study. But Schmidt believes that the death was imminent regardless of the treatment and the commercial potential of KITE’s pipeline Axi-Cel treatment is unchanged.
“Unfortunately, Axi-Cel was not able to rescue this patient. Among ~200 patients treated by Kite (and another 100+ treated at the NCI), Axi-Cel’s treatment related mortality is ~2%… Axi-Cel’s risk:benefit in r/r aggressive NHL [cancer of the lymphatic system] remains highly compelling and our views of Axi-Cel’s approvability and market adoption are unchanged,” the analyst noted, concluding that “Kite is a top pick and we would take advantage of today’s weakness.”
The popular Insider’s Hot Stocks tool is also a popular way to find stocks that exhibit strong buy indicators based on insider trading. You can filter the transactions according to four different trading stock strategies:
Here we selected all four strategies and looked for stocks with rising share prices and transactions by best-performing insiders. Investors can choose to look for plummeting shares in the hope of buying low and gaining when prices improve- but this is a more risky strategy.
One stock that really stood out was Pulse Biosciences (PLSE). We can see that over the last three months, shares in the company, which is developing a new nano-pulse stimulation technology for a variety of applications, have soared by 86.15% and that the stock has a strong positive insider signal.
Owner Robert Duggan, who has a five-star rating on TipRanks, has made four purchases of Pulse shares over the last month. The most recent purchase eight days ago was worth over $2 million. Kerrisdale Capital has just issued a negative report on the stock causing prices to drop in pre-market trading today – this could either be seen as a warning sign or a buying opportuinty depending on your analysis of the stock!
Also check out bank holding company Flagstar Bancorp (FBC) which has seen a series of informative buy transactions recently and has a Moderate Buy analyst consensus rating: