It is a widely known investing axiom that insiders sell their companies' stocks for any number of reasons, but they buy for only one reason - they think the stocks are going to go up. Because Warren Buffett 's stock-picking abilities helped make him one of the world's wealthiest men, checking into his portfolio for companies with heavy insider buying can be a good place to start research on worthwhile stocks.
The stocks in Buffett's portfolio with most active insider buying are: The Coca-Cola Company ( KO ), Gannett Co. Inc. ( GCI ), General Electric Company ( GE ) and The Washington Post Company ( WPO ).
Coca-Cola Company ( KO )
Warren Buffett owned 200 million shares of Coca-Cola at the end of the first quarter, making it almost 20% of his portfolio. He has never sold a share of the company.
Coke had three insider buys in the second quarter: Three directors bought shares. The largest purchase was of more than $20.3 million worth of shares by Director Barry Diller in April. As Diller's purchase price averaged about $77 per share, investors can buy the stock cheaper at its Tuesday price of $75.25 per share after a 0.67% increase for the day.
Six insiders also sold shares of the company in the second quarter.
Two days before Diller and another director bought shares, Coke announced that it was seeking approval for a 2-for-1 stock split. Coke's chairman was pushing for the split, the 11 th in its 92-year history and its first in the last 16 years. Shareholders will vote on the split July 10.
"Our recommended two-for-one stock split reflects the Board of Directors' continued confidence in the long-term growth and financial performance of our Company," said Muhtar Kent, chairman and CEO of TheCoca-Cola Company. "Our system's 2020 Vision to double our revenues over this decade provides a clear roadmap for creating value for our consumers, customers, bottling partners and shareowners. A stock split reflects our desire to share value with an ever-growing number of people and organizations around the world."
Coke also announced in the first quarter its 50 th consecutive annual dividend increase, giving shareholders an 8.5 percent raise from 47 to 51 cents per share per quarter.
Gannett Co. Inc. ( GCI )
Buffett owns 1,740,231 shares of Gannett Co. Inc. as of March 31, 2012, making it a mere 0.035% of his portfolio.
It tied with General Electric Co. ( GE ) for the second-most insider buys in his portfolio, with one director making two purchases of 20,000 shares in the second quarter. Gannett trades for $14.04 Tuesday after a 6.3% jump. Multiple newspaper companies' stocks advanced on Tuesday after News Corp. announced the potential spin-off of its publishing entities.
In its first quarter results released April 16, Gannett announced earnings per share of $0.28 compared to $0.37 per share in the prior-year quarter. Net operating revenues were down 2.6% over the prior year in publishing advertising and publishing circulation, but increased in its digital and broadcasting segments.
Gannett's focus on establishing digital content and advertising platforms that will generate growth was evidenced in a 13 percent increase of digital revenue growth in its Publishing segment.
Regarding future plans, the company is expecting 2% to 4% annual revenue growth and greater earnings growth by 2015, and plans to return more than $1.3 billion to shareholders by 2015.
"In addition, our new all-access subscription model has been rolled out in 38 markets and is progressing as anticipated," Gannett's president and CEO Gracia Martore said at a presentation to media and entertainment analysts in New York on Thursday. "New ventures like Digital Marketing Services and the USA TODAY Sports Media Group that leverage and extend our brands and assets are gaining traction and delivering results. We are confident in our strategy and our ability to achieve sustainable revenue growth while maintaining a strong balance sheet and generating increasing shareholder value."
The company also increased its revenue 150 percent to $0.80 per share annually and purchased approximately 2.4 million shares for $35.5 million during the quarter.
