Bullish Trinity: Stocks with Short Covering, Insider & Hedge Fund Buying

Bullish Trinity: Stocks with Short Covering, Insider & Hedge Fund Buying

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When it rains, it pours. It's a saying we apply to our personal lives here and there when things get really good, or really bad. In this case, companies can apply it to their good fortune in investor trends. 

We made a list of stocks that have signaled not one, but three promising trends that signal optimism among investors.

1. Insider Buying -  If anyone knows what is going on with a company, it has to be the people that work there. But when insiders start to buy up shares of their company, there’s really only one good explanation: They think the share price is undervalued. If they’re buying, then insiders are confident there is more upside potential, and might have a hunch their stock is going to rally. Of course, these predictions aren’t always realized, but it’s a strong indicator for outsiders to go by.

We screened for names showing net insider buying in the current quarter in excess of 1.5% share float. 

2. Institutional Buying - Insider activity alone isn’t enough to actually shift market prices. This day and age it’s the work of hedge funds that make it their daily business to buy, sell and move millions of shares every day that really get share prices moving. But hedge funds pay attention to insiders too, so insider activity can set a spark that puts institutional buying (or selling) in action. 

Like insiders, institutional sales are closely watched and reported. Here we screen for names showing significant net institutional buying in the current quarter, representing at least 5% of share float.

3. Short Covering – We screened for companies with a recent significant decreases in shares shorted. This signals optimism, or rather a lack of pessimism, from short sellers – a group of investors who benefit when share price falls. 

We screened for names showing short covering month over month in excess of 1.5% share float. 

 

The Final List

Four stocks made the final list. As this 1-year return chart shows, their performance hasn't exactly been stellar. Could all this bullishness signal that a rebound is imminent?

1. Janus Capital Group, Inc. (JNS, Earnings, Analysts, Financials): A publicly owned asset management holding company. Market cap at $1.81B, most recent closing price at $9.53.

Over the last six months, insiders were net buyers of 30,846,700 shares, which represents about 17.17% of the company's 179.68M share float.

Net institutional purchases in the current quarter at 22.3M shares, which represents about 12.41% of the company's float of 179.68M shares.

Shares shorted have decreased from 21.89M to 18.91M over the last month, a decrease which represents about 1.65% of the company's float of 180.29M shares. Days to cover ratio at 7.26 days.
 

2. Tempur Pedic International Inc. (TPX, Earnings, Analysts, Financials): Distributes bedding products worldwide. Market cap at $2.77B, most recent closing price at $46.36.

Over the last six months, insiders were net buyers of 590,915 shares, which represents about 1.49% of the company's 39.64M share float.

Net institutional purchases in the current quarter at 7.0M shares, which represents about 17.66% of the company's float of 39.64M shares.

Shares shorted have decreased from 8.12M to 6.70M over the last month, a decrease which represents about 3.58% of the company's float of 39.64M shares. Days to cover ratio at 3.27 days.
 

3. VMware, Inc. (VMW, Earnings, Analysts, Financials): Provides virtualization and virtualization-based cloud infrastructure solutions primarily in the United States. Market cap at $35.45B, most recent closing price at $82.77.

Over the last six months, insiders were net buyers of 2,985,224 shares, which represents about 3.92% of the company's 76.07M share float.

Net institutional purchases in the current quarter at 6.4M shares, which represents about 8.41% of the company's float of 76.07M shares.

Shares shorted have decreased from 8.31M to 6.85M over the last month, a decrease which represents about 1.92% of the company's float of 76.07M shares. Days to cover ratio at 2.25 days.
 

4. Vistaprint N.V. (VPRT, Earnings, Analysts, Financials): Operates as an online provider of marketing products and services to micro businesses worldwide. Market cap at $1.33B, most recent closing price at $39.57.

Over the last six months, insiders were net buyers of 391,580 shares, which represents about 1.86% of the company's 21.00M share float.

Net institutional purchases in the current quarter at 1.8M shares, which represents about 8.57% of the company's float of 21.00M shares.

Shares shorted have decreased from 8.59M to 8.18M over the last month, a decrease which represents about 1.95% of the company's float of 21.00M shares. Days to cover ratio at 19.71 days.
 

(List compiled by Rebecca Lipman)

 

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