Today, I'm going to do something different…
As the chief-investment strategist behind Game-Changing Stocks, I normally spend hours poring over a multitude of newspapers and financial journals to bring my readers the market's next groundbreaking trend.
While this approach has been highly successful, every now and then I like to try something new.
So rather than spending the laborious hours digging through mounds of financial data trying to decipher what will be the "next big thing," I'm going to be looking at where some of the industry's most respected figures — the insiders — are parking their cash.
After all, if the CEO of Company X starts buying his stock when it's trading in the proverbial "toilet," then that tells us something about management's long-term expectations for the business…
So, using the Bloomberg Professional Service, I performed a special search function to display all insider trades for the past six months with a market value of more than $1 million. Because stock is often part of an executive's total compensation package, I excluded filings that were made to exercise stock options.
After looking at all the insider buys from the past six months, two companies in particular stood out as potential game-changers…
The first company to make my list was Amyris (Nasdaq: AMRS). Amyris is ultimately a bio-fuel company, but that's not the whole story — not by a long shot.
The better frame for Amyris is as a "synthetic biology" company. Its scientists use special organisms that are basically little living factories that have been genetically programmed to produce a certain compound.
Right now, the company has its sights set on biofuel, specifically on generating cellulosic ethanol from Brazilian sugarcane. Amyris is a pioneer in this field.
One of Amyris' insiders recently made a $24.5 million bet on this technology, buying nearly 4.6 million shares of the $300 million company for $5.78 each…
Of course, timing is everything. And the timing of this trade is worth looking into. The stock-price chart for this company is brutal: It's down more than 55% for the year as the broader market has surged 11.5%. As the stock fell, however, this insider stuck his neck out.
Turns out it wasn't just any insider either… Once revealed, the buyer proved to be none other than Total SA (NYSE: TOT), the French oil giant.
If an industry leader and qualified expert such as Total, which knows as much about the future of energy as anyone on earth, is willing to buy into a "falling" stock like Amyris, then it's logical to assume that there is a good reason.
The clear and unmistakable conclusion here is that Total thinks Amyris' business model, and its technology, has legs.
Another company sitting on a promising business venture is Geoeye (Nasday: GEOY). Geoeye is a satellite company that sells images to intelligence agencies, among other customers.
International tensions in a variety of "closed" hotspots like North Korea and Iran make this type of signal intelligence invaluable, and such images are the lifeblood of operations in forward areas like Afghanistan. Without good satellite coverage, Osama bin Laden would still be living in his Abbottabad compound.
Insiders bought $41.1 million of this company last November at an average purchase price of $21.98 a share, fairly close to where the stock trades right now. The nice thing here is that this is a true "conviction buy" by individuals. None of these trades were made by a hedge fund or another major shareholder — only executives and directors.
Their message is clear: As the company's stock falls under its fair value, we're going to buy it. I expect to see more of this — Shares are trading at 11 times earnings and 11 times anticipated earnings, but for the past two years they've been valued far more richly, at 16.7 times earnings, or more than 50% higher than they are now.
It's a value play then, to some degree. But is it a game-changer?
Satellite technology, and GeoEye itself, changed the nature of intelligence gathering. The company has leveraged its ability to gather extra-terrestrial images for other commercial purposes, and production and other services for its clients now accounts for 20% of its revenue, an area that is likely to grow. This remains an aggressive growth play.
Risks to Consider: Let me warn you though… with investing, nothing is 100% certain. Both of these companies have relatively small-market caps. As such, you can expect quite a bit of volatility from both of these stocks.
Action to Take –> That said, I think these stocks are worth taking a look at. Both companies are sitting on cutting-edge technology with the potential to deliver serious-short-term and long-term results… and company insiders clearly think that's worth something.
P.S. — My research team and I have spent the past couple of months finding the biggest investment trends for the coming year. We've made 11 predictions, each of which offers investors a good chance to profit over the twelve months. If you want to learn more about these "game-changing" predictions, I invite you to watch this presentation.