Tracking insider buying and selling activity has been proven to be a very effective method of finding good stocks to buy.
Insiders usually buy when the stock price is down, since they are usually long-term investors by nature and are fond of bargain prices.
When they are buying into shares on the rise - especially when they're hitting 52-week highs - it demonstrates a high amount of confidence in the direction of the company they oversee and operate.
All insider activity is filed with the U.S. Securities and Exchange Commission, so interested investors can easily find out which stocks insiders love - and which ones they're dumping.
Tracking activity can be done using a stock screener like finviz.com, that lists the stock, the buyer's name, relationship to the company, date of sale, number of shares and total value.
This week we have a couple more stocks hitting our radar with high insider buying, making good stocks to buy now if you like to invest where the key officers put their money. Take a look.
Stocks to Buy Now that Insiders Love
Both of the following companies are going to be major beneficiaries of the nascent housing recovery. If insiders are right, these stocks will likely see explosive growth in revenues and earnings that could take the stock to multiples of the current stock price.
Investors who also believe in the lasting nature of a housing recovery should play "follow the leader" and add these companies to their long-term portfolio.
One company that is near new highs and seeing strong insider buying is Home Loan Servicing Corp. (Nasdaq: HLSS).
The company acquires mortgage servicing assets such as mortgage service advances and servicing rights. The Cayman Islands-based company buys mortgage servicing rights primarily from Ocwen Financial Corp. (NYSE: OCN). The rights are paid monthly and include fees for establishing and maintaining escrow accounts for insurance and taxes as well as forwarding interest and principle payments to the mortgage holder. The assets that the company buys tend to have very little credit and price risk and have been paying off huge for Home Loan Services Solutions.
As revenue and earnings have spiked higher, insiders have been aggressively buying the shares in the open market, like these recent purchases...
President John Patrick Van Vlack has purchased more than 10,000 shares of stock since the beginning of the year with is most recent buy coming on May 29 at $23.29 per share. Chief Financial Officer James Lauter purchased stock the same day for $23.27 a share.
In the last six months officers and directors have purchased more than 188,000 shares of stock even as the price climbed steadily higher.
In addition to the strong price appreciation the stock pays a generous dividend and yields more than 7% at the current price. Investors might be smart to follow the example of insiders in purchasing shares of this high-yielding growth stock.
Hilltop Holdings Inc. (NYSE: HTH) is another company that is seeing strong positive insider activity as the stock approaches new highs.
Hilltop is the holding company for PlainsCapital Bank in Dallas, TX and NLASCO, a property and casualty insurance company. The bank engages in business and consumer banking with a strong emphasis on commercial banking and mortgage production. It's the third-largest commercial bank in the Dallas area.
Its mortgage arm, Prime Lending, was the fourth-largest in the United States in terms of purchase units. The financial services division, First Southwest, is one of the largest financial advisory firms in the country.
Hilltop closed its purchase of PlainsCapital in December of 2012 and has seen sales and earnings explode since the acquisition. Founder Jerald Ford has made a fortune for investors in bank stocks in Texas, most notably following the last banking crisis back in the early 1990s. Investors are encouraged by the results of the company so far and have pushed the stock price up to new highs based on the strong growth expectations.
This has not discouraged insiders and officers and directors have been buying the stock heavily all year. So far this year they have purchased more than 87,000 shares of the financial services company.
In the last month alone President James Huffine has purchased more than 30,000 shares sin the open market.
Given the strong results the bank has achieved so far investors might want to follow his lead.