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A study (pdf) titled "Predictive and Statistical Properties of Insider Trading" by James H. Lorie and Victor Niederhoffer reached the following conclusion:

This study indicates that proper and prompt analysis of data on insider trading can be profitable, although almost all previously published studies have reached the contrary conclusion. When insiders accumulate a stock intensively, the stock can be expected to outperform the market during the next six months. Insiders tend to buy more often than usual before large price increases and to sell more than usual before price decreases.

Intensive insider buying was defined by the following three criteria:

  1. The stock was purchased by three or more insiders within one month.
  2. The stock was sold by no insiders in the month of intensive purchasing.
  3. At least two purchasers increased their holdings by more than 10 per cent.

The stocks meeting these criteria outperformed the market by 9.51 per cent in the six months following the period of "intensive" purchasing.

In this article I will feature five stocks that met these three criteria of intensive insider buying during the month of November.

1. ARMOUR Residential REIT (ARR) is a Maryland corporation that invests primarily in hybrid adjustable rate, adjustable rate and fixed rate residential mortgage-backed securities [RMBS] issued or guaranteed by U.S. Government-chartered entities. ARMOUR is externally managed and advised by ARMOUR Residential Management [ARRM]. ARMOUR Residential REIT has elected to be taxed as a real estate investment trust [REIT] for U.S. federal income tax purposes.

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Insider buys

  • Daniel Staton purchased 10,000 shares on November 15, and 50,000 shares on March 14. Daniel Staton currently holds 211,757 shares of the company and serves as Chairman of the Board.
  • James Mountain purchased 10,000 shares on November 15. James Mountain is Chief Financial Officer of the company.
  • Marc Bell purchased 10,000 shares on November 15, and 35,000 shares on March 14. Marc Bell currently holds 96,757 shares of the company and serves as a director of the company.
  • Scott Ulm purchased 5,000 shares on November 15, and currently holds 131,725 shares of the company. Scott Ulm has been the Co-Chief Executive Officer, Vice Chairman, Chief Investment Officer and Head of Risk Management of ARMOUR since November 2009.
  • Jeffrey Zimmer purchased 5,000 shares on November 15, and currently holds 36,864 shares of the company. Jeffrey Zimmer has been the Co-Chief Executive Officer, Vice Chairman and President of ARMOUR since November 2009.

Financials

The company reported the third-quarter financial results on November 1, with the following highlights:

GAAP income$54.9 million
Core income$71.4 million
Book value$7.91 per share

ARMOUR Residential REIT announced on September 14, a Q4 2012 monthly cash dividend rate for the company's common stock of $0.09 per share.

My analysis

There have been eight insider buy transactions and there have not been any insider sell transactions this year. There are seven analyst buy ratings, three neutral ratings and one sell rating with a average target price of $7.27. The stock is trading at a P/E ratio of 7.44 and a forward P/E ratio of 6.33. The stock has a 15.95% dividend yield. The stock could be a good pick below the book value of $7.91 per share.

2. Oiltanking Partners (OILT) is a publicly traded master limited partnership engaged in independent storage and transportation of crude oil, refined petroleum products and liquefied petroleum gas. The company provides its services to a variety of customers, including major integrated oil companies, distributors, marketers and chemical and petrochemical companies. The company's assets are strategically located along the Gulf Coast of the United States.

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Insider buys

  • Mark Leland purchased 1,000 shares on November 7-21, and currently holds 4,000 shares of the company. These shares were purchased pursuant to a unit purchase plan in compliance with Rule 10b5-1. Mark Leland serves as a director of the company.
  • Brian Brantley purchased 300 shares on November 14, and currently holds 550 shares of the company. Brian Brantley has served as Vice President, General Counsel and Secretary of the company's general partner and Oiltanking Holding Americas, Inc. since September 2012.
  • David Griffis purchased 115 shares on November 7, pursuant to a unit purchase plan in compliance with Rule 10b5-1. David Griffis currently holds 7,766 shares of the company. David Griffis has served as a member of the board of directors of the company's general partner since March 2011.

Financials

The company reported the third-quarter financial results on November 7, with the following highlights:

Revenue$33.3 million
Net income$14.9 million
Cash$6.1 million
Debt$51.3 million

Outlook

Carlin Conner, Chairman, President and Chief Executive Officer of the Partnership's general partner commented on November 7:

Our current crude storage expansion projects and crude pipeline project are on budget and ahead of schedule with an additional 1.1 million barrels of new storage capacity and the pipelines expected to be placed into service by early January of 2013.

Competition

Oiltanking Partners' competitors include Enbridge Energy Partners LP (EEP), Enterprise Products Partners L.P. (EPD) and Kinder Morgan Energy Partners, L.P. (KMP). Here is a table comparing these companies.

CompanyOILTEEPEPDKMPIndustry
Market Cap:1.43B8.63B45.78B29.67B4.74B
Employees:N/AN/AN/A8,1201.30K
Qtrly Rev Growth (yoy):0.16-0.34-0.080.110.18
Revenue:130.34M7.01B43.10B8.38B2.57B
Gross Margin:0.730.280.080.480.28
EBITDA:76.64M1.02B4.29B3.34B432.68M
Operating Margin:0.470.100.070.270.09
Net Income:57.91M543.80M2.53B682.80MN/A
EPS:1.491.922.85-0.421.10
P/E:24.6814.8918.00N/A23.52
PEG (5 yr expected):0.482.862.411.722.08
P/S:10.801.241.083.551.77

Oiltanking Partners' gross margin is above the industry average.

My analysis

The stock has a $68 price target from the Point and Figure chart. There have been 19 insider buy transactions and there have not been any insider sell transactions this year. There are three analyst buy ratings, four neutral ratings and 0 sell ratings with a average target price of $28.00. The stock is trading at a forward P/E ratio of 27.85 and has a 4.14% dividend yield. The 200-day moving average is currently at $33.22, which could be a good entry point for the stock.

3. FedFirst Financial Corporation (FFCO) is a stock holding company established in 2010, which has the wholly owned subsidiary First Federal Savings Bank, a federally chartered stock savings bank. Through its wholly owned subsidiary FedFirst Exchange Corporation, the Bank has an 80% controlling interest in Exchange Underwriters. Exchange Underwriters is a full-service, independent insurance agency that offers property and casualty, commercial liability, surety and other insurance products. First Federal operates as a community-oriented financial institution offering residential, multi-family and commercial mortgages, consumer loans and commercial business loans as well as a variety of deposit products for individuals and businesses from eight locations in southwestern Pennsylvania.

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Insider buys

  • David Wohleber purchased 2,010 shares on November 5-20, and currently holds 14,954 shares of the company. David Wohleber serves as a director of the company.
  • John Swiatek purchased 1,000 shares on November 20, and currently holds 7,000 shares of the company. John Swiatek serves as a director of the company.
  • Carlyn Belczyk purchased 1,500 shares on November 7, and currently holds 8,566 shares of the company. Carlyn Belczyk serves as a director of the company.
  • John Kish purchased 1,800 shares on November 5, and currently holds 14,966 shares of the company. John Kish serves as a director of the company.

Financials

The company reported the third-quarter financial results on October 31, with the following highlights:

Net income$0.6 million
Cash$10.5 million
Book value$20.55

News

FedFirst Financial Corporation announced on November 14, that the company's board of directors has approved the repurchase of up to 285,000 shares of the company's outstanding common stock, which is approximately 10% of outstanding shares.

The company also announced that its Board of Directors has declared a special cash dividend of $0.25 per share on its outstanding common stock, payable on or about December 7, 2012 to stockholders of record as of the close of business on November 26, 2012.

Competition

FedFirst Financial Corporation's competitors include Northwest Bancshares (NWBI) and PNC Financial Services Group (PNC). Here is a table comparing these companies.

CompanyFFCONWBIPNCIndustry
Market Cap:47.02M1.16B29.38B55.93M
Employees:861,77945,940199.00
Qtrly Rev Growth (yoy):0.090.010.180.11
Revenue:13.53M292.68M14.31B25.84M
Gross Margin:N/AN/AN/A0.93
EBITDA:N/AN/AN/A25.29M
Operating Margin:0.290.340.270.30
Net Income:1.75M62.41M2.61BN/A
EPS:0.620.664.910.59
P/E:26.6717.9211.3113.72
PEG (5 yr expected):N/A3.452.481.85
P/S:3.473.952.052.41

FedFirst Financial Corporation's operating margin is in line with the industry average.

My analysis

The stock is trading at its 52 -week highs. There have been six insider buy transactions and there have not been any insider sell transactions this month. The stock could be a good pick below the book value of $20.55 per share.

4. Oriental Financial Group (OFG) is a financial holding company operating under U.S. and Puerto Rico banking laws and regulations. Now in its 48th year, Oriental is the fourth-largest bank based in Puerto Rico. Primarily through its principal operating subsidiaries, Oriental Bank and Trust and Oriental Financial Services, the company targets mid- and high-net worth customers, including professionals and owners of small- and mid-sized businesses.

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Insider buys

  • José Fernández purchased 5,000 shares on November 21-23, and 6,340 shares of Non-Cumulative Perpetual Preferred Stock, Series D on November 1. José Fernández currently holds directly 6,340 shares of Non-Cumulative Perpetual Preferred Stock, Series D and 35,000 shares indirecty by Non-Qualified Deferred Compensation Trust. José Fernández is Vice Chairman of the Board, President, Chief Executive Officer and Director of Oriental Financial Group, positions he has held since 2004.
  • Ramon Rosado purchased 925 shares on November 12, and currently holds 925 shares of the company. Ramon Rosado is Senior Vice President & Treasurer of the company.
  • Pablo Altieri purchased 2,536 shares of Non-Cumulative Perpetual Preferred Stock, Series D on November 1, and currently holds 2,536 shares of Non-Cumulative Perpetual Preferred Stock, Series D. Pablo Altieri has been a director of Oriental Financial Group since 1990.
  • Francisco Arrivi purchased 380 shares of Non-Cumulative Perpetual Preferred Stock, Series D on November 1, and currently holds 380 shares of Non-Cumulative Perpetual Preferred Stock, Series D. Francisco Arrivi has been a director of Oriental Financial Group since 1998.
  • Julian Inclán purchased 12,680 shares of Non-Cumulative Perpetual Preferred Stock, Series D on November 1, and currently holds 12,680 shares of Non-Cumulative Perpetual Preferred Stock, Series D. Julian Inclán has been the Chairman of the Board of Oriental Financial Group since July 2012.
  • Josen Rossi purchased 5,072 shares of Non-Cumulative Perpetual Preferred Stock, Series D on November 1, and currently holds 5,072 shares of Non-Cumulative Perpetual Preferred Stock, Series D. Josen Rossi has been a director of Oriental Financial Group since 2008.
  • Carlos Souffront purchased 14,020 shares of Non-Cumulative Perpetual Preferred Stock, Series D on November 1, and currently holds 14,020 shares of Non-Cumulative Perpetual Preferred Stock, Series D. Carlos Souffront is General Counsel & Secretary of the company.
  • Ganesh Kumar purchased 8,608 shares of Non-Cumulative Perpetual Preferred Stock, Series D on November 1, and currently holds 8,608 shares of Non-Cumulative Perpetual Preferred Stock, Series D. Ganesh Kumar, DM. was named Executive Vice President and Chief Financial Officer position in early 2012.

Oriental Financial Group announced on October 31, that it had priced an underwritten public offering of 960,000 shares of its Series D non-cumulative perpetual preferred stock, with a liquidation preference of $25.00 per share at a price to the public of $25.00 per share for gross proceeds of $24 million.

Financials

The company reported the third-quarter financial results on October 24 with the following highlights:

Net income$17.8 million
Cash$785.5 million
Book value$15.40 per share

Competition

Oriental Financial Group's competitors include Doral Financial Corporation (DRL), First Bancorp (FBP) and Popular (BPOP). Here is a table comparing these companies.

CompanyOFGDRLFBPBPOPIndustry
Market Cap:535.07M104.05M850.41M2.04B31.36B
Employees:750N/A2,4908,32923.26K
Qtrly Rev Growth (yoy):0.420.390.580.120.24
Revenue:172.75M131.65M356.94M1.34B14.97B
Gross Margin:N/AN/AN/AN/A0.69
EBITDA:N/AN/AN/AN/A6.05M
Operating Margin:0.37-0.690.250.220.29
Net Income:24.84M-29.55M277.26M160.59MN/A
EPS:0.61-0.231.311.531.91
P/E:19.40N/A3.1612.9010.66
PEG (5 yr expected):1.60N/A5.511.331.13
P/S:3.100.792.381.522.23

Oriental Financial Group's operating margin is above the industry average.

My analysis

The stock has a $8 price target from the Point and Figure chart. There have been nine insider buy transactions and there have not been any insider sell transactions this month. There are three analyst buy ratings, one neutral rating and 0 sell ratings with a average target price of $12.50. The stock is trading at a forward P/E ratio of 7.43 and has a 2.04% dividend yield. The stock could be a good pick below the book value of $15.40 per share.

5. Weatherford International (WFT) is one of the largest oilfield services companies, Weatherford operates in more than 100 countries and employs more than 50,000 people worldwide. With a product and service portfolio that spans the life cycle of a well- drilling, evaluation, completion, production and intervention- and a robust research and development effort, the company is well positioned to meet the ever-evolving needs of the oil and gas industry.

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Insider buys

  • Emyr Parry purchased 10,000 shares on November 26, and currently holds 51,689 shares of the company. Emyr Parry serves as a director of the company.
  • Robert Rayne purchased 20,000 shares on November 16, and currently holds 211,274 shares of the company. Robert Rayne serves as a director of the company.
  • Robert Moses purchased 16,000 shares on November 15, and currently holds 613,422 shares of the company. Robert Moses serves as a director of the company.
  • Dharmesh Mehta purchased 25,000 shares on November 15, and currently holds 262,686 shares of the company. Dharmesh Mehta is Sr. VP-Compl. & Prod. Systems.
  • Joseph Henry purchased 5,000 shares on November 15, and currently holds 185,406 shares of the company. Joseph Henry is Sr. VP & Co-General Counsel of the company.

Financials

The company reported the third-quarter financial results on November 13, with the following highlights:

Revenue$3.8 billion
Income before income taxes$191 million
Cash$366 million
Debt$8.9 billion

Competition

Weatherford International's competitors include Baker Hughes (BHI), Halliburton (HAL) and Schlumberger (SLB). Here is a table comparing these companies.

CompanyWFTBHIHALSLBIndustry
Market Cap:7.40B18.32B29.70B92.52B406.44M
Employees:61,00058,80070,000113,0001.70K
Qtrly Rev Growth (yoy):0.260.030.090.110.23
Revenue:13.73B21.40B28.28B43.86B439.34M
Gross Margin:0.260.200.180.210.32
EBITDA:2.66B4.07B6.47B11.09B63.04M
Operating Margin:0.110.120.170.170.11
Net Income:348.00M1.40B2.89B5.53BN/A
EPS:0.453.213.104.130.21
P/E:21.6612.9910.3416.8812.90
PEG (5 yr expected):0.520.850.630.890.77
P/S:0.550.851.052.131.30

Weatherford International is trading below the industry average P/S ratio.

My analysis

The stock has a $3.5 price target from the Point and Figure chart. There have been 11 insider buy transactions and there have not been any insider sell transactions this year. There are 12 analyst buy ratings, nine neutral ratings and one sell rating with an average target price of $17.50. The stock is trading at a forward P/E ratio of 8.92. The stock could be a good pick below the book value of $13.05 per share.

Source: 5 Stocks With Intensive Insider Buying This Month