There is one quote you hear more often than any other on the subject of insider buying. It is from legendary value investor Peter Lynch, who said “Insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.”
But is this piece of wisdom, which was part of many “rules” for investing included in Lynch’s famous books One Up on Wall Street and Beating the Street, really valid?
Forbes contributor Josh Brown says that while there is nothing negative about insider buying, there is also very little meaning to the action. Brown says some insider buying is just window dressing from execs intent on portraying an air of confidence in their company.
But how do stocks with insider buying actually perform? SmartMoney’s Elizabeth O’Brien recently pointed to evidence from University of Michigan Finance Professor Nejat Seyhun, who studied a twenty-year period of insider buying and market performance starting in 1975, concluding that a high degree of insider buying is very reliable indicator.
Below we list eleven Canadian tech stocks with recent insider purchases.
1. 5N Plus (TSX:VNP)
5N Plus board member Jean-Marie Bourassa picked up 50,000 shares of the company at $3.90 on March 16th. The purchases came days after Versant analyst Massimo Fiore downgraded the stock on what he felt were disappointing fiscal 2011 results.
2. Akela Pharma (TSX:AKL)
Rudy Emmelot, the longtime CFO of Akela Pharma was appointed acting CEO on March 14th and has made several purchases in the short time since.
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3. Carmanah Technologies (TSX:CMH)
Michael Sonnenfeldt, a Carmanah insider, has been aggressive in buying shares of the Victoria-based solar player of late, including the purchase of 184,000 shares on March 16th at $.48 and $.49 cents.
4. International Datacasting (TSX:IDC)
International Datacasting board member Graham MacDonald McBride has been bullish on the Ottawa-based satellite stalwart, his buys include 48,000 shares purchased March 14th. M Partners Ron Shuttleworth has a $.50 cent target on the stock.
5. Kelso Technologies Inc. (TSXV:KLS)
Anthony Andrukaitis, who joined the board of Kelso last August, has been buying, including 50,000 shares on March 19th. Kelso CEO Bond….James Richard Bond, to be exact, bought 19,000 March 1st. And Neil Gambow, CEO of Kelso’s US operations has been buying, too.
6. Mediagrif Interactive Technologies (TSX:MDF)
Shares of Mediagrif have climbed from just over $11 last October to recent highs of more than $17. But CEO Claude Roy still thinks they’re a bargain. Roy has been picking up shares of late, including 7000 on March 14th.
7. Softchoice (TSX:SO)
Toronto IT player Softchoice has also been on a tear of late, spiking from $8 in October to $13 today. But insider Allan James Reesor, who picked up 5000 shares March 19th, and CEO David MacDonald, who bought 2000 shares March 8th, are undeterred.
8. Theratechnologies (TSX:TH)
Manhattan-based investment firm Ingalls & Snyder owns a lot of Theratechnologies and have been buying aggressively of late, including 58,300 shares on March 15th.
9. Wi-LAN (TSX:WIN)
Wi-LAN CEO Jim Skippen, Cantech Letter’s 2011 Canadian Tech Stock Exec of the Year, has been a regular buyer of his company recently, making various purchases. He is joined by recently appointed COO Michael Vladescu, who picked up 5000 share on March 14th. Maybe they’re listening to Byron Capital’s Tom Astle, who has a $7 target on Wi-LAN.
10. Westport Innovations (TSX:WPT)
Insider Kevin Douglas has been aggressively buying of late, including more than 160,00 shares on March 14th. Is he looking to challenge legendary investor George Soros as the largest single shareholder of the Vancouver-based cleantech?
11. Rutter (TSX:RUT)
Rutter’ Director and former CEO and Donald Clark has been a persistent buyer of the company of late, taking advantage of a stock trading near five year lows.