Company insiders have intimate knowledge of how their particular business operates. They know when sales are likely to rise. They know about a new marketing strategy that could boost the company’s bottom line. They know about industry conditions that may be changing for the better. And they know the company’s balance sheet like the back of their hands.

A company insider might sell shares for any number of reasons. He or she might need cash for a major purchase or decide to donate a lump sum to charity (yes, this has happened). So an insider selling shares does not necessarily mean bad news for the stock in question.

However, an insider will buy shares of his own company for only one reason: He thinks the stock is set to make him money. There is “no better tip-off to the probable success of a stock” than insider buying, according to Peter Lynch. We couldn’t agree more. That’s why we’re always monitoring insiders’ buying trends.

Here are three names that have recently come up on our radar:

First up is ViroPharma (VPHM: NASDAQ). ViroPharma’s shares were battered in February when the company announced it did not achieve its desired endpoints with a Phase 3 trial for a treatment for cytomegalovirus.

After the announcement and subsequent drop in share price, four different insiders purchased VPHM stock for $3.97–4.79 per share.

Next up is Evergreen Energy Inc. (EEE: NYSE) As shares sank to new lows between 30–40 cents, 10 insiders bought in. A few days later, Evergreen announced an agreement with Sumitomo Corp. to advance their joint K-Fuel project in Indonesia. The announcement sent shares soaring — the stock rose more than 100% just days after the announcement.

Of course, there was no way to know about the lucrative K-Fuel deal — unless you were a company insider with access to this kind of information. But thanks to Securities and Exchange Commission filings, we can keep tabs on insiders’ buys and sells…

The good news in late January has helped make EEE one of the few bright spots on the NYSE…shares of EEE are up 135% on the year (although the stock plummeted much of the latter half of ’08).

Our final insider buying alert is Mad Catz Interactive Inc. (MCZ: AMEX). This stock is down roughly 40% so far this year, with its biggest drop occurring on Feb. 12, after posting poor third-quarter results.

What do these company insiders know about Mad Catz that we don’t? Only time will tell…

Source: Three Ways to Follow the Smart Money

This from Smart Profits Report:

Today’s eye-popping financial market statistic is brought to you by John Roque at Natixis Bleichroeder…

Since the U.S. stock market peaked in October 2007, the world’s equity market capitalization has shrunk by 53%. If you’re counting at home, that’s $33 trillion.

So if misery loves company and you’re too depressed to look at your brokerage account statements, maybe you can grab some consolation from knowing that investors all over the world share your pain.

In fact, some poor folks have it even worse. According to Bespoke Investment Group…

• Iceland is down a staggering 90% this year.
• Ukraine is off 76%.
• Bulgaria is lower by 74%.

In fact, 51 countries have experienced worse market declines than the U.S. market’s 44% tumble. So are there any winners at all amid this global mess? Just three…

This Year’s (Very Short) List Of Winners

Only Ecuador, Tunisia and Ghana have posted gains in 2008. Which is why I’m pleased to announce my new investment service – The Ecuador, Tunisia, Ghana Trader (trademark pending).

I’m being facetious, of course. But the point is that there are investors out there who are so desperate to find a performing investment that they’re willing to consider just about everything.

At times like this, you’ll often hear folks confidently booming out the “Yeah, but this time, it’s different” line. I’ve long been an opponent of talk like this. And I’ll tell you why…

“This Time It’s Different”… And Other Soundbyte-Friendly Clichés

During the dot com boom, I was routinely told that I “didn’t understand the new paradigm.”

And when the real estate market took off, I was called names for being so stupid for not borrowing cheap money to buy spec houses and home sites in so-called “can’t miss” places like Port St. Lucie, Florida – a city that now boasts the dubious honor of having more than 11% of the homes in the foreclosure process. Unemployment is also over 10% in the county.

But is it truly different this time?

Investors have endured and overcome a Civil War, two World Wars, and the Great Depression. But now, the government seems to be in the process of bailing out every poorly run business. In addition, we’ve got an incoming president that Wall Street knows little about yet, as well as a rapidly changing financial landscape.

The Game May Have Changed… But The Rules Haven’t

Dr. John P.  Hussman, who runs the Hussman Funds, wrote a letter to shareholders explaining precisely why we’re not in uncharted territory. In fact, if the S&P 500 slides to 780, [...], the market would be in the lowest 20% of all historical market valuations. A drop to 700 on the S&P would represent the lowest 10% of historical valuations.

In other words, things are tough and could get worse, but the market has been here before. To read the whole piece, click here.

In the long run, I believe the way you will make money in the market is the way investors have done it for over 200 years – investing in businesses that grow earnings.

Don’t Pack Your Bags Just Yet… There’s Potential In U.S. Large And Small-Caps Alike

Despite the pervading smell of desperation in the market at the moment, you don’t need to buy shares of Accra Brewery Company, Tunisair, or Diner’s Club del Ecuador to have a prayer of making a profit.

Instead, look for stocks that could rebound in 2009. There are so many that have suffered a beating, the list could be extensive. And when you do, first look at the biggest and best companies in their fields – ones who’ve experienced market downturns before and have stood the test of time.

For example, consider Wells Fargo (NYSE: WFC) in the financial sector.

Take a look at biotech giant Genentech (NYSE: DNA) in the healthcare sector.

Cast your eye over Microsoft (Nasdaq: MSFT) in the technology space.

And as the economy recovers, companies that should fare well include McDonald’s (NYSE: MCD), Caterpillar (NYSE: CAT), Costco (Nasdaq: COST), and ITT Corp. (NYSE: ITT).

Don’t neglect the small-cap market either, though. Small-cap stocks have a history of leading the market out of a downturn. You just need to be careful which ones you pick, as it can still be a volatile sector – particularly in a fragile market.

Companies with revolutionary products include Accuray (Nasdaq: ARAY), a long-term position in the Xcelerated Profits Report portfolio and ViroPharma (Nasdaq: VPHM), which is part of the portfolio in my small-cap healthcare service, Access (for more information on Access, call our VIP Services Team at: 888.570.9830 (within the U.S.) or 410.454.0498 (from overseas).

No Pain, No Gain

Currently, the pain train is barreling down the tracks at full speed and we’re all aboard for the ride.

It’s a bumpy and uncomfortable one, for sure. But it will eventually hit the brakes and pull into station. And when the markets calm down and things return to some sense of normality again, you’ll be glad you invested in stocks that you’re familiar with, rather than exotic investments that are often more trouble than they’re worth.

My colleagues Karim, Jim, Lee and I have all been hammering home this point for a few months now. But it’s crucial that you don’t get wrapped up in the hysteria and make poor decisions now that you’ll pay for later.

Simply put, get ready to buy good stocks on the cheap. I know it’s scary now. But this climate won’t last forever and normal order will be restored. That has been the case for over 200 years.

Source: You Don’t Have To Go To Tunisia To Find Solid Stocks… They’re Right Here In The U.S.

• The Standard & Poor’s 500 Banks Index dropped 10% to close at 136.01, it’s worst one-day decline since the index’s inception in 1989, Bloomberg News reported. National City Corp. (NCC) was one of the leaders, as it dropped more than 17% to close at $3.12. National City continues to fight off persistent rumors that the Ohio-based bank is not adequately capitalized.

• Crude oil for August delivery dropped 4.5% percent with a decline of $6.49 yesterday (Tuesday) to trade at $138.69 at the close of trading on the New York Mercantile Exchange, Bloomberg News reported. Contracts had traded as low as $135.92 earlier in the day as high gas prices curb demand due to changing consumer-driving habits.

• Citigroup Inc. (C) stock slumped to its lowest level since the financial giant’s creation via the merger of Travelers Group and Citicorp in October 1998, Reuters reported. Citi shares traded as low as $14.01 before paring losses to close down $0.70, a 4.6% decline, at $14.52 yesterday (Tuesday).

• Volkswagen AG (OTC: VLKAY) chose Chattanooga, TN over rival sites in two other states for a new U.S. assembly plant expected to create about 2,000 jobs, The Associated Press reported. Sites in Alabama and Michigan were also considered for the plant, which is part of Volkswagen’s strategy to increase its presence in America. Volkswagen, Europe’s biggest automaker, closed its last U.S. production facility in 1988.

• Johnson & Johnson (JNJ) yesterday (Tuesday) reported an 8% jump in second-quarter profit, thanks to strong consumer sales and the weak dollar spurring sales overseas. For the first time ever, international sales topped U.S. sales for the company. Favorable currency exchange rates due to the weak dollar accounted for almost two-thirds of the increased sales, according to the Associated Press.

• The U.S. Securities and Exchange has issued an emergency edict to stop “naked” short selling in major financial firms, Reuters reported. The rule requires any person making a short sale in the listed securities to borrow the securities before the short sale is effected and deliver the securities on settlement date.

• European stocks as measured by the FTSEurofirst 300 Index hit a 3-year closing low of 1,110.09 yesterday (Tuesday) as financial shares got hammered. The index of top European shares ended down 2.1% after having been down as much as 3% earlier in the day, Reuters reported. “The sell-off is extremely violent, it’s a bloodbath, and I fear that it could last all summer,” one anonymous Paris-based trader said.

• Shares of biotech firm ViroPharma Inc. (VPHM) tumbled yesterday (Tuesday) after announcing a bid to takeover Lev Pharmaceuticals Inc. (OTC: LEVP), Forbes reported. The potential $617.5 million deal will eat away most of ViroPharma’s cash reserves, causing its shares to drop $1.95, a 15% decline, to close at $10.62.

Source: Global Investing Roundups Wednesday, July 16th, 2008