Natural Gas, Healthcare, Next up Gaming

They nailed it again.

 

Over the last couple of months, insiders at natural gas and healthcare companies have been buying their own stock hand over fist. And they’re already profiting from these purchases.

 

Natural gas prices rallied 13% in four days last week, pushing the natural gas index (^XNG) to a three-year high. Similarly, the healthcare ETF (IYH) rallied 7% in the last two weeks of July. Stocks in both of these sectors are hitting new highs:

 

Johnson and Johnson (JNJ) and Pfizer (PFE), the two biggest holdings in the healthcare ETF both are trading at or near new 52-week highs. Similarly, XTO Energy (XTO) and Williams Companies (WMB) lead the natural gas sector.

 

Marketwide, we’re seeing money flow into long-term consumer staples: medicine, energy, tobacco, and flowing out of luxury consumer spending sectors: stocks like Starbucks and Whole Foods. The insiders, via their purchases, have been anticipating this for months.

 

So what’s next on the insider agenda?

 

Gaming and Casinos.

 

As I wrote in the July 19th edition, Director Neil Barsky of International Game Technology (IGT) bought $33 million worth of his company’s stock for Alson Capital Partners, an investing firm he runs.

 

This week, Michael Gaughan, CEO of Boyd Gaming (BYD) bought $36 million worth of his company’s stock. After all, the stock is cheaper than it’s been in over a year. And like IGT, BYD has historically staged impressive rallies in the fourth quarter.
 

 

Should the Fed finish its interest rate hikes, we’ll see an influx of capital into the markets and economy. And a significant chunk of this will find its way into the slot machines and games of casinos.

 

Barsky and Gaughan are certainly betting on it.

 

Good trading,

 

Graham

• Big Profits Come in Small Packages
  By Jeff Clark Thursday, August 3, 2006
  
• Sub-Prime Lending is a Rolling Stone...
  By Graham Summers Wednesday, August 2, 2006
  
• Waiting on Bernanke, Again
  By Jeff Clark Tuesday, August 1, 2006
  
• Countrywide’s Risky Business is Starting to Slow Down…
  By Graham Summers Monday, July 31, 2006
  
• Big Pharma is Taking Off… Are You on Board?
  By Jeff Clark Friday, July 28, 2006