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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 percent.

The stocks meeting these criteria outperformed the market by 9.51 percent 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 last 30 days.

1. MEMC (WFR) is a global leader in semiconductor and solar technology. MEMC has been a pioneer in the design and development of silicon wafer technologies for over 50 years. Through its SunEdison subsidiary, MEMC is also a developer of solar power projects and a worldwide leader in solar energy services.


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Insider buys

  • Matthew Herzberg purchased 3,000 shares on December 5 and currently holds 3,000 shares of the company. Matthew Herzberg joined MEMC in March 2011 as Senior Vice President and Chief Human Resources Officer.
  • Ahmad Chatila purchased 83,682 shares on November 20 and currently holds 407,654 shares of the company. Ahmad Chatila became President and Chief Executive Officer and a member of the Board of Directors in March 2009.
  • Steven Tesoriere purchased 3,238,000 shares on November 14-15 and currently controls 18,431,372 shares of the company. Steven Tesoriere serves as a director of the company.

Financials

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

Revenue $601.6 million
Net income $37.0 million
Cash $609.8 million
Debt $2.3 billion

Outlook

For the fourth quarter 2012:

  • Semiconductor Materials revenue down 4% to 11% sequentially
  • Solar energy systems non-GAAP sales volume in the range of 90 MW to 120 MW
  • Solar energy systems average pricing greater than $3.50/watt
  • Operating expenses less than $90 million
  • Capital spending of less than $35 million
  • Non-GAAP interest expense of about $25 million

My analysis

The stock has a $6.5 price target from the Point and Figure chart. There have been three insider buy transactions and there have not been any insider sell transactions during the last 30 days. There are six analyst buy ratings, eight neutral ratings and three sell ratings with a average target price of $6.10. The stock is trading at a forward P/E ratio of 14.85. The company has a book value of $2.54 per share which could be a good entry point for the stock.

2. Fisher Communications (FSCI) is a Seattle-based communications company that owns and operates 13 full power television stations, 7 low power television stations, 3 owned radio stations and one managed radio station in the Western United States. The company also owns and operates Fisher Interactive Network, its online division (including over 120 online sites) and Fisher Pathways, a satellite and fiber transmission provider.


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Insider buys

  • Hassan Natha purchased 400 shares on December 6 and currently holds 12,290 shares of the company. Mr. Natha became Senior Vice President and Chief Financial Officer of the company in July 2011.
  • Paul Bible purchased 1,000 shares on November 30 and currently holds 8,313 shares of the company. Mr. Bible has been a director of the company since April 2009.
  • Matthew Goldfarb purchased 2,000 shares on November 28 and currently holds 5,260 shares of the company. Mr. Goldfarb was elected as a director effective May 19, 2011, and is a member of the company's Compensation Committee.

Financials

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

Revenue $39.9 million
Net income $2.2 million
Cash $103.8 million

Competition

Fisher Communications' competitors include Beasley Broadcast Group (BBGI), Belo Corp. (BLC) and LIN TV Corp. (TVL). Here is a table comparing these companies.

Company FSCI BBGI BLC TVL Industry
Market Cap: 221.54M 114.04M 737.40M 338.56M 1.42B
Employees: 784 402 2,403 1,921 1.20K
Qtrly Rev Growth (yoy): 0.01 0.03 0.16 0.36 0.00
Revenue: 162.46M 97.96M 690.08M 468.80M 690.08M
Gross Margin: 0.59 0.37 0.40 0.69 0.42
EBITDA: 25.69M 28.50M 243.79M 159.08M 77.14M
Operating Margin: 0.12 0.27 0.31 0.28 0.17
Net Income: 37.14M 10.82M 94.09M 84.81M N/A
EPS: 4.22 0.48 0.91 1.67 0.17
P/E: 5.91 10.46 7.87 3.81 18.12
PEG (5 yr expected): N/A 0.27 1.84 1.73 1.58
P/S: 1.36 1.16 1.07 0.72 1.54

Fisher Communications is trading below the industry average P/E ratio.

My analysis

There have been three insider buy transactions and there have not been any insider sell transactions during the last 30 days. The stock is trading at a P/E ratio of 5.91 and a forward P/E ratio of 20.63. The company has a book value of $13.34 per share. The stock has a 0.60% dividend yield. The company paid a special $10 dividend on October 22. I have a neutral bias for the stock based on the fundamental and technical picture.

3. Willdan (WLDN) is a provider of professional technical and consulting services to public agencies at all levels of government, public and private utilities and commercial and industrial firms. Willdan provides a broad range of services to clients, including engineering and planning, energy efficiency and sustainability, economic and financial consulting, and national preparedness and interoperability.


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Insider buys

  • Thomas Brisbin purchased 50,000 shares on December 5 and currently holds 75,465 shares of the company. Thomas Brisbin joined the company's Board of Directors in April 2007, when he was also appointed President and Chief Executive Officer.
  • Douglas McEachern purchased 2,000 shares on November 26 by The McEachern Family Trust. The McEachern Family Trust currently holds 22,500 shares of the company. Douglas McEachern joined the company's Board of Directors in 2009.
  • Raymond Holdsworth purchased 10,000 shares on November 13-14 by The Holdsworth Family Trust. The Holdsworth Family Trust currently holds 20,000 shares of the company. Raymond Holdsworth joined the company's Board of Directors in 2009.

Financials

The company reported the third-quarter financial results on November 8 with the following highlights:

Revenue $21.5 million
Net income $0.8 million
Cash $9.2 million
Debt $3.0 million

Competition

Willdan's competitors include Jacobs Engineering Group (JEC) and Tetra Tech (TTEK). Here is a table comparing these companies.

Company WLDN JEC TTEK Industry
Market Cap: 15.77M 5.41B 1.67B 167.11M
Employees: 524 48,600 13,000 2.84K
Qtrly Rev Growth (yoy): -0.25 0.02 0.13 0.18
Revenue: 100.50M 10.89B 2.02B 580.63M
Gross Margin: 0.36 0.16 0.18 0.18
EBITDA: -4.12M 702.70M 207.46M 62.70M
Operating Margin: -0.05 0.06 0.07 0.06
Net Income: -18.38M 378.95M 104.38M N/A
EPS: -2.53 2.94 1.63 0.03
P/E: N/A 14.14 16.05 15.52
PEG (5 yr expected): N/A 0.93 0.92 1.00
P/S: 0.16 0.50 0.83 0.32

Willdan is trading below the industry average P/S ratio.

My analysis

The stock is currently flirting with the 200 day moving average. There have been three insider buy transactions and there have not been any insider sell transactions during the last 30 days. There are 0 analyst buy ratings, one neutral rating and 0 sell ratings for the stock currently. The stock is trading at a forward P/E ratio of 5.97. The company has a book value of $2.31 per share. The stock could be a good pick below the book value.

4. Crescent Financial Bancshares (CRFN) is the parent company of VantageSouth Bank and is a subsidiary of Piedmont Community Bank Holdings. VantageSouth Bank is a North Carolina-chartered commercial bank and operates 20 full service banking offices in the communities of Cary (2), Apex, Burlington (2), China Grove, Clayton, Fayetteville, Garner, Holly Springs, Knightdale, Pinehurst, Raleigh (3), Salisbury, Sanford, Southern Pines and Wilmington (2), North Carolina.


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Insider buys

  • James Lucas purchased 1,000 shares on December 4 and 3,809 shares on November 8-27. James Lucas currently holds 323,078 shares of the company and serves as a director of the company.
  • Terry Earley purchased 3,800 shares on November 8-9 and currently holds 7,200 shares of the company. Terry Earley is Chief Financial Officer of the company.
  • Lee Roberts purchased 2,000 shares on November 8-9 and currently holds 2,000 shares of the company. Lee Roberts is Chief Operating Officer of the company.

Financials

The company reported the third-quarter financial results on October 30 with the following highlights:

Net loss $0.3 million
Book value $4.17 per share
Tangible book value $3.28 per share

Competition

Crescent Financial Bancshares' competitors include Bank of America Corporation (BAC), BB&T Corporation (BBT) and PNC Financial Services Group (PNC). Here is a table comparing these companies.

Company CRFN BAC BBT PNC Industry
Market Cap: 139.34M 112.68B 19.75B 29.26B 43.23M
Employees: 159 272,600 31,800 45,940 159.00
Qtrly Rev Growth (yoy): 1.40 -0.26 0.19 0.18 0.12
Revenue: 34.06M 80.66B 8.48B 14.31B 29.42M
Operating Margin: 0.09 0.18 0.40 0.27 0.25
Net Income: -1.38M 3.98B 1.80B 2.61B N/A
EPS: -0.06 0.37 2.55 4.91 0.46
P/E: N/A 28.26 11.07 11.27 13.27
PEG (5 yr expected): N/A 3.17 1.05 2.75 1.75
P/S: 4.09 1.40 2.33 2.04 1.74

Crescent Financial Bancshares is growing faster than the industry.

My analysis

The stock is currently trading above the 200 day moving average. There have been five insider buy transactions and there have not been any insider sell transactions during the last 30 days. There are 0 analyst buy ratings, one neutral rating and 0 sell ratings for the stock currently. The stock is trading at a forward P/E ratio of 24.55. The company has a tangible book value of $3.28 per share which could act like a support for the stock if the 200 day moving average fails to hold.

5. Chemical Financial Corporation (CHFC) is a diversified financial services company which operates through one state-chartered traditional bank subsidiary, Chemical Bank. Chemical Bank operates through an internal organizational structure of four regional banking units, offering a full range of traditional banking and fiduciary products and services to the residents and business customers in the bank's geographical market areas. Chemical serves a broad customer base through 142 banking offices across 32 counties in the lower peninsula of Michigan.


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Insider buys

  • David Ramaker purchased 4,225 shares on November 20 and currently holds 42,382 shares of the company. Mr. David Ramaker is Chairman, Chief Executive Officer and President of Chemical Financial.
  • James Meyer purchased 2,000 shares on November 19 and currently holds 6,158 shares of the company. James Meyer serves as a director of the company.
  • Terence Moore purchased 500 shares on November 9 and currently holds 17,233 shares of the company. Mr. Moore has served as a director of Chemical Financial since January 1998 and is Chairman of the Audit Committee and a member of the Compensation and Pension and Corporate Governance and Nominating Committees.
  • James Fitterling purchased 2,500 shares on November 9 and currently holds 7,500 shares of the company. James Fitterling serves as a director of the company.

Financials

The company reported the third-quarter financial results on October 22 with the following highlights:

Net income $13.1 million
Book value $21.75 per share
Tangible book value $17.52 per share

Competition

Chemical Financial Corporation's competitors include Citizens Republic Bancorp (CRBC), Flagstar Bancorp (FBC) and Independent Bank Corporation (IBCP). Here is a table comparing these companies.

Company CHFC CRBC FBC IBCP Industry
Market Cap: 598.36M 728.77M 1.04B 33.31M 54.13M
Employees: 1,716 1,977 3,576 940 417.00
Qtrly Rev Growth (yoy): 0.07 0.10 1.08 0.21 0.08
Revenue: 216.25M 366.41M 841.30M 130.43M 37.03M
Operating Margin: 0.33 0.30 0.25 0.17 0.32
Net Income: 50.55M 335.68M 68.47M 1.27M N/A
EPS: 1.84 8.51 1.21 0.14 1.04
P/E: 11.83 2.19 15.43 26.15 11.30
PEG (5 yr expected): 2.87 0.54 1.63 1.33 1.88
P/S: 2.75 2.00 1.23 0.25 2.09

Chemical Financial Corporation's P/E ratio is inline with the industry average.

My analysis

The stock has a $35.5 price target from the Point and Figure chart. There have been four insider buy transactions and there have not been any insider sell transactions during the last 30 days. There are 0 analyst buy ratings, one neutral rating and 0 sell ratings for the stock currently. The stock is trading at a P/E ratio of 11.83 and a forward P/E ratio of 11.07. The company has a tangible book value of $17.52 per share and the stock has a 3.89% dividend yield. I have a cautiously bullish bias for the stock currently based on the fundamental and technical picture.

Source: 5 Stocks With Recent Intensive Insider Buying