Insider Monkey
11 Stocks Insiders and Billionaires Are Crazy About
Fahad Saleem
9 min read

In This Article:

In this article, we will take a detailed look at the 11 Stocks Insiders and Billionaires Are Crazy About. For a quick overview of such stocks, read our article 5 Stocks Insiders and Billionaires Are Crazy About.

In his famous book titled One Up on Wall Street, Peter Lynch talks about how average investors miss out on opportunities by not paying attention to everyday businesses they and their families interact with. Lynch tells the story of his friend who did “research” based on analyst price targets and expert stock recommendations and put $3,000 in a disk drive company stock he and his advisors thought would skyrocket. But Lynch's friend failed to pay attention to a women apparel company his wife was a fan of. This apparel company’s stores were always packed with customers and its products were super popular among women, but the average investor did not pay attention to this common knowledge. After a few months this apparel company’s stock skyrocketed while the disk drive company he had invested in tanked.

"Actually I could go on for several pages about the tenbaggers I’ve missed, and more sorry examples will crop up further along in the book. When it comes to ignoring promising opportunities, I’m as adept as the next person. Once I was standing on the greatest asset play of the century, the Pebble Beach golf course, and it never occurred to me to ask if it was a public company. I was too busy asking about the distance between the tees and the greens. Luckily there are enough tenbaggers around so that both of us could fail to notice the majority and we’ll still hit our share. In a large portfolio such as mine I have to hit several before it makes an appreciable difference. In a small portfolio such as yours, you only have to hit one. Moreover, the nice thing about investing in familiar companies such as L’eggs or Dunkin’ Donuts is that when you try on the stockings or sip the coffee, you’re already doing the kind of fundamental analysis that they pay Wall Street analysts to do. Visiting stores and testing products is one of the critical elements of the analyst’s job. During a lifetime of buying cars or cameras, you develop a sense of what’s good and what’s bad, what sells and what doesn’t. If it’s not cars you know something about, you know something about something else, and the most important part is, you know it before Wall Street knows it. Why wait for the Merrill Lynch restaurant expert to recommend Dunkin’ Donuts when you’ve already seen eight new franchises opening up in your area? The Merrill Lynch restaurant analyst isn’t going to notice Dunkin’ Donuts (for reasons I’ll soon explain) until the stock has quintupled from $2 to $10, and you noticed it when the stock was at $2.”

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