Stocks wobbled on Thursday after a hotter-than-expected PPI report confirmed fears that inflation in the US remains sticky and the Fed will have to wait until at least the second half of 2024 before it could begin to cut interest rates. However, analysts believe the broader outlook of the economy remains strong and the bulls claim now could be the right time to pile into stocks for long-term gains. LPL Financial in its letter to investors earlier this month said that it does not believe there would be a “storm” before the current calm in the market. In fact, the financial services company is expecting stocks to keep gaining throughout 2024 as it cited data showing that when stocks begin a new year on a positive note, they keep gaining on the back of momentum in the following months. LPL said when the S&P 500 has been up in January and February, it has gained an average of 11% over the rest of the year and has been higher in 26 out of 28 cases. LPL also said that the Fed’s rate hike cycle is almost over now and stocks can keep gaining momentum despite a higher for longer scenario if inflation remains sticky. That’s because LPL believes high earnings growth and future earnings expectations are justifying stock valuations.
But LPL doesn’t believe everything would be fun and games in the market in the coming months.
“History does suggest volatility may pick up after such a strong and steady advance. Although the S&P 500 has returned over 11% annualized since 1980, on average, the index typically experiences one 10% correction per year and three 5% to 10% pullbacks. A divisive presidential election now just eight months away could bring more volatility, as could geopolitical tensions or weakness in the mega-cap technology stocks.”
Beyond Magnificent Seven
Another reason to bet on stocks in 2024, according to market bulls, is expectations that the stock market rally that started in 2023 on the back of the AI wave and strong economy would broaden out to other, smaller companies instead of remaining concentrated in a few stocks (read Magnificent Seven or a handful of mega-cap tech stocks). In a December 2023 report, BlackRock said that historically, equal-weighted index has always beaten market cap-weighted index in terms of returns over the past 20 years. BlackRock said 2023 was an anomaly and it expects the market’s “reversion to the mean” in 2024.
Billionaire Ken Fisher and Corporate Insiders Are Buying These Stocks
Methodology
In this backdrop we decided to see which stocks billionaire Ken Fisher and corporate insiders have been loading up on. For that we first scanned Ken Fisher's Q4'2023 portfolio and picked stocks that saw insider buying activity over the past one year. From these stocks we picked the companies with the highest insider purchases in terms of dollar value. Some of the top names in the list include Exxon Mobil Corp (NYSE:XOM), Block Inc (NYSE:SQ) and Warner Bros Discovery Inc (NASDAQ:WBD). With each stock we have mentioned Ken Fisher's stake, as of the end of the fourth quarter of 2023. But why is it important to keep tabs on hedge fund and insider activity? Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
On February 6, Broadwood Partners, L.P., which has a director status at Lineage Cell Therapeutics Inc (NYSE:LCTX), bought 6,730,770 shares of Lineage Cell Therapeutics Inc (NYSE:LCTX) at $1.04 per share. The transaction was part of an agreement of Lineage Cell Therapeutics Inc (NYSE:LCTX) according to which it planned to raise about $14 million.
According to the company, Broadwood Partners had agreed to purchase 6.73 million shares in an offering, and board member, Don Bailey, agreed to buy about 100,000 shares. On February 6 the stock was trading at around $1.11. Since then the stock price has jumped by about 9%. In addition to LCTX, hedge funds also like Exxon Mobil Corp (NYSE:XOM), Block Inc (NYSE:SQ) and Warner Bros Discovery Inc (NASDAQ:WBD).
Frederik Wilhelm Mohn, a director at Transocean LTD's (NYSE:RIG) board, amassed one million shares of Transocean LTD (NYSE:RIG) at $4.89 per share on February 27, 2024. Since then the stock has gained about 16% as of March 13.
Ken Fisher’s hedge fund reported owning a stake worth about $175,983 in the company as of the end of the fourth quarter of 2023. Insider Monkey’s database of 933 hedge funds shows that 45 hedge funds had stakes in Transocean LTD (NYSE:RIG) as of the end of December 2023.
Last month, during its latest earnings call, the company's management talked about guidance and expectations:
"Over the next 18 months, we expect the award of 7 more rig lines based on open opportunities, including 5 between Petrobras’ Sépia and Roncador tenders, which are expected to be awarded in the second quarter of this year. We anticipate that at least 1 of the 7 rigs will come from outside the region. If this materializes as expected, including rigs currently preparing 4 and mobilizing 2 contracts for previously awarded work, the rig count in Brazil will increase from 31 there today to 36 rigs by the end of 2025. The U.S. Gulf of Mexico continues to be a source of steady demand, with several tenders and negotiations ongoing. We expect that most demand requirements over the next 18 months will be met by rigs already in the region and don’t currently anticipate adding significant capacity to the area since the introduction of the Atlas, Titan and Stena Evolution contracts.
Energy Transfer LP Unit (NYSE:ET) ranks eighth in our list of the stocks corporate insiders and Ken Fisher are crazy about. Energy Transfer LP Unit (NYSE:ET) saw heavy insider buying activity last year. On December 12, 2023, Energy Transfer LP Unit's (NYSE:ET) co-CEO Mackie McCrea bought 50,000 shares of Energy Transfer LP Unit (NYSE:ET) at $13.19 per share. Since then the stock has gained about 14%. Ken Fisher’s hedge fund reported owning a $178,645 stake in Energy Transfer LP Unit (NYSE:ET) as of the end of the fourth quarter of 2023. Overall, 34 hedge funds tracked by Insider Monkey had stakes in Energy Transfer LP Unit (NYSE:ET).
Energy Transfer LP (NYSE:ET) owns and operates the largest and most balanced collection of energy infrastructure assets in the United States. ET’s assets include 125,000 miles of oil and natural gas pipelines, export facilities on both the Gulf Coast and East Coast, and more than 1 million barrels per day of natural gas liquid fractionation capacity. ET accounts for 20% of worldwide natural gas liquid exports. Further, ET is uniquely connected to every major hydrocarbon basin in the United States.
Air Products and Chemicals Inc (NYSE:APD) CEO Seifi Ghasemi loaded up on 11,000 shares of the company at $264.42 per share on November 13, 2023. At that time the stock was trading at around $265.03. Since then through March 13 the stock has lost about 7% in value.
Ken Fisher’s hedge fund reported owning just 1,172 shares of Air Products and Chemicals Inc (NYSE:APD) as of the end of the fourth quarter of 2023.
Like APD, insiders are also buying Exxon Mobil Corp (NYSE:XOM), Block Inc (NYSE:SQ) and Warner Bros Discovery Inc (NASDAQ:WBD).
Sarepta Therapeutics Inc (NASDAQ:SRPT) ranks sixth in our list of the stocks bought by Ken Fisher and corporate insiders. Fisher Investments had a $1.3 million stake in Sarepta Therapeutics Inc (NASDAQ:SRPT) as of the end of the fourth quarter of 2023. The stock saw heavy insider buying activity in 2023. On November 3, Richard Barry, a director at Sarepta Therapeutics Inc's (NASDAQ:SRPT) board, loaded up on 50,000 shares of Sarepta Therapeutics Inc (NASDAQ:SRPT) at $78.81 per share. The total value of this transaction was about $3.9 million. Since the date of this insider buying activity the stock has jumped about 56% in value. Back in August 2023 another director at Sarepta Therapeutics Inc's (NASDAQ:SRPT) board had bought 34,867 shares of Sarepta Therapeutics Inc (NASDAQ:SRPT) at $106.15 per share.
