This Buffett favorite is one of 4 cheap stocks the ‘smartest money' has been buying lately

According to Bank of America, tracking insider buying can be a lucrative strategy, especially following market selloffs. MarketWatch highlights four stocks with significant recent insider buying: Wynn Resorts (WYNN), driven by expansion plans and purchases from Tilman Fertitta; Occidental Petroleum (OXY), buoyed by Warren Buffett's continued investment; J.B. Hunt Transport Services (JBHT), signaling confidence despite tariff concerns; and Estée Lauder (EL), undergoing a turnaround with new management and cost-cutting measures, all trading at discounts to their historical valuations.

Analysis

Recent market analysis underscores the potential alpha generation from tracking insider buying, particularly following significant market downturns, a strategy Bank of America notes delivered 19 percentage points of annualized outperformance between 2008 and 2010. Current insider activity highlights several companies: Wynn Resorts (WYNN) has seen $31.5 million in stock purchases since February 18, primarily by beneficial owner Tilman Fertitta alongside $2.2 million by directors, amid plans for expansion with Wynn Al Marjan Island and anticipated sales growth from improved consumer confidence as recession and tariff fears ease; the stock trades at a 43% to 50% discount to its trailing five-year average price-to-earnings and price-to-sales ratios. Occidental Petroleum (OXY), where Berkshire Hathaway has purchased $35 million in stock this year as part of a $6.9 billion investment over the past three years, is viewed favorably despite its stock declining almost 30% in the past year due to fallen WTI prices; the company generated $2.1 billion in cash flow in Q1, sold $1.3 billion in assets, repaid $2.3 billion in debt, and trades at a price-to-sales multiple of 1.5, a 6% discount to its five-year trailing average. J.B. Hunt Transport Services (JBHT) saw a director purchase $10 million in stock and its chief operating officer buy $400,000, suggesting insider confidence that the stock's 16% year-to-date decline on tariff concerns is an overreaction; JBHT's stock trades at a price-to-sales multiple of 1.1, a 22% discount to its trailing five-year average. Estée Lauder (EL), whose stock is down 44% in the past year, is identified as a turnaround candidate with new management, product innovation, new sales channels like Amazon and TikTok, and significant cost-cutting including a 20% reduction in middle-management ranks and a 30% cut in executive expenses, with a target to return to sales growth in 2026; notable insider buying includes $8.7 million by a director in February on top of $24.9 million last November, and the stock's price-to-sales multiple of 1.1 is 64% below its trailing five-year average.

Key Decisions for Investors

• Investors should scrutinize Wynn Resorts, Occidental Petroleum, J.B. Hunt, and Estée Lauder due to strong insider buying signals and notable discounts to their historical valuations.
• Consider Wynn Resorts for its expansion-led growth and potential consumer recovery, and Occidental Petroleum for its robust cash flow and significant backing by Berkshire Hathaway, while being mindful of sector-specific risks such as gaming demand fluctuations and oil price volatility.
• Evaluate J.B. Hunt based on the premise that current tariff fears may be overstated, as implied by insider actions, and approach Estée Lauder as a turnaround situation, acknowledging the 2026 sales growth target and inherent execution risks despite compelling insider conviction and deep value indications.