A REIT With Risk

Newcastle Investment (NCT) recently closed a secondary stock offering at $9.35 per share in which two company insiders, Secretary Randal Nardone and Director Wesley Edens, each bought about $1 million worth of stock, respectively.

We track insider purchases because, on average, stocks bought by insiders tend to outperform the market, with multiple insider buys being a particularly good sign. We believe that this is because insiders are already tied to the company's prospects, so to buy more shares, as Nardone and Edens did, they have to be confident that the stock is undervalued. The same two insiders had bought shares in another offering in July 2012 at $6.70 per share; obviously, the stock is up significantly since that time. Newcastle's stock price has doubled in the last year, bringing it to a market capitalization of $1.7 billion....422 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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