3 REITs With Recent Intensive Insider Buying

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 |  Includes: BXMT, JMI, RESI, VNQ
by: Markus Aarnio

The Vanguard REIT Index ETF (NYSEARCA:VNQ) was trading as low as $19.95 in March 2009. The index is currently trading at $69.61, or 248.9% above the low made in March 2009.

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In this article I will feature three REITs that have seen intensive insider buying during the last 30 days. Intensive insider buying can be defined by the following three criteria:

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

1. Javelin Mortgage Investment Corp. (NYSE:JMI) is a Real Estate Investment Trust [REIT] that invests in mortgage backed securities and related investments. Javelin is externally managed by Armour Residential Management LLC.

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Insider buying by insider (last 30 days)

  • Daniel Staton purchased 6,200 shares on May 29 - June 3 and currently controls 131,200 shares or 1.0% of the company. Daniel Staton has been the Non-Executive Chairman of Javelin since June 18, 2012.
  • James Mountain purchased 4,000 shares on May 29 and currently holds 4,000 shares or less than 0.1% of the company. James Mountain has been the Chief Financial Officer of Javelin since September 1, 2012.
  • Scott Ulm purchased 1,000 shares on May 29 and currently holds 2,525 shares or less than 0.1% of the company. Scott Ulm has been the Co-Chief Executive Officer, Co-Vice Chairman, Chief Investment Officer, Head of Risk Management and a director of Javelin since June 18, 2012.
  • John Chrystal purchased 1,500 shares on May 14-29 and currently holds 1,500 shares or less than 0.1% of the company. John Chrystal has been a director of Javelin since July 2, 2012.

Insider buying by calendar month

Here is a table of Javelin's insider trading activity by calendar month.

Month Insider buying / shares Insider selling / shares
May 2013 12,700 0
April 2013 0 0
March 2013 0 0
February 2013 0 0
January 2013 0 0
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The month of May has seen all of the insider buying this year.

Financials

The company reported the first-quarter financial results on May 6 with the following highlights:

GAAP income $11.0 million
Book value $18.40 per share
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Competition

Javelin's competitors include American Capital Agency Corp. (NASDAQ:AGNC), Annaly Capital Management (NYSE:NLY) and MFA Financial (NYSE:MFA). Here is a table comparing these companies.

Company JMI AGNC NLY MFA Industry Average (REIT - Diversified)
Market Cap: 113.40M 10.29B 12.91B 3.21B 3.65B
Employees: N/A N/A 147 37 250.00
Qtrly Rev Growth (yoy): N/A -0.54 -0.05 -0.08 0.00
Revenue: 13.94M 1.08B 2.13B 340.58M 560.72M
Gross Margin: 0.92 1.00 1.00 1.00 0.90
EBITDA: N/A N/A N/A N/A 360.42M
Operating Margin: 0.89 0.85 0.90 0.90 0.51
Net Income: 12.20M 854.00M 1.65B 289.89M N/A
EPS: 3.76 2.57 1.69 0.81 2.19
P/E: 4.02 10.11 8.05 10.96 3.69
PEG (5 yr expected): N/A N/A 1.85 2.32 N/A
P/S: 8.06 9.37 6.01 9.33 6.50
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Javelin's P/S ratio is in line with the industry average.

My analysis

There have been four different insiders buying the shares and there have not been any insiders selling the shares during the last 30 days. The company has an insider ownership of 0.07%. There are four analyst buy ratings, one neutral rating and zero sell ratings with an average target price of $19.20. The company has a book value of $18.40 per share and the stock has a dividend yield of 18.41%. I believe the stock could be a good pick below the book value.

2. Altisource Residential Corporation (NYSE:RESI) focuses on acquiring, owning, and managing single-family rental properties throughout the United States. The company intends to elect and qualify to be taxed as a REIT for U.S. federal income tax purposes beginning the year ending December 31, 2013.

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Insider buying by insider (last 30 days)

  • Michael Eruzione purchased 1,000 shares on May 31 and currently holds 1,000 shares or less than 0.1% of the company. Michael Eruzione was appointed to the Board of Directors of Residential in December 2012.
  • Salah Saabneh purchased 4,500 shares on May 23-24 and currently holds 4,700 shares or less than 0.1% of the company. Salah Saabneh has served as Executive Vice President, Corporate Development since February 2013.
  • Ashish Pandey purchased 10,000 shares on May 23-24 and currently holds 10,000 shares or less than 0.1% of the company. Ashish Pandey has served as the Chief Executive Officer of Residential since December 2012.
  • David Reiner purchased 1,000 shares on May 13 and currently holds 1,000 shares or less than 0.1% of the company. David Reiner was appointed to the Board of Directors of Residential in December 2012.
  • Kenneth Najour purchased 10,000 shares on May 13 and currently holds 10,000 shares or less than 0.1% of the company. Kenneth Najour has served as Chief Financial Officer since March 2013.

Insider buying by calendar month

Here is a table of Residential's insider trading activity by calendar month.

Month Insider buying / shares Insider selling / shares
May 2013 26,500 0
April 2013 0 0
March 2013 0 0
February 2013 0 0
January 2013 0 0
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The month of May has seen all of the insider buying this year.

Financials

The company reported the first-quarter financial results on May 9 with the following highlights:

Net loss $1.0 million
Cash $21.9 million
Debt $12.9 million
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Competition

Residential faces competition from various sources for the acquisition of sub-performing and non-performing loans. Residential's competitors include other REITs, pension funds, insurance companies, hedge funds, investment companies, partnerships and developers. Residential also faces significant competition in the single-family rental market from other real-estate companies, including REITs, investment companies, partnerships and developers.

My analysis

There have been five different insiders buying the shares and there have not been any insiders selling the shares during the last 30 days. There is one analyst buy rating, zero neutral ratings and zero sell ratings with an average target price of $24.00. The company has a book value of $12.67 per share, which could be a good entry point for the stock.

3. Blackstone Mortgage Trust (NYSE:BXMT), a real estate finance company, primarily focuses on originating mortgage loans backed by commercial real estate assets. The company is externally managed by BREDS/CT Advisors L.L.C., a subsidiary of Blackstone (NYSE:BX) and is a real estate investment trust.

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Insider buying by insider (last 30 days)

  • Blackstone Holdings III L.P. purchased 1,960,784 shares on May 29 pursuant to a public offering. Blackstone Holdings III L.P. currently controls 2,460,784 shares or 8.5% of Blackstone Mortgage Trust.
  • Stephen Plavin purchased 19,608 shares on May 29 pursuant to a public offering. Stephen Plavin currently holds 46,496 shares or 0.2% of the company. Stephen Plavin is Chief Executive Officer, President and Director.
  • Michael Nash purchased 29,264 shares on May 29 pursuant to a public offering. Michael Nash currently holds 29,264 shares or 0.1% of the company. Michael Nash serves as a director of the company.
  • Henry Nassau purchased 5,000 shares on May 29 pursuant to a public offering. Henry Nassau currently holds 21,647 shares or less than 0.1% of the company. Henry Nassau serves as a director of the company.
  • Randall Rothschild purchased 1,625 shares on May 29 pursuant to a public offering. Randall Rothschild currently holds 1,625 shares or less than 0.1% of the company. Randall Rothschild is Secretary and Managing Director, Legal and Compliance.
  • Geoffrey Jervis purchased 9,804 shares on May 29 pursuant to a public offering. Geoffrey Jervis currently holds 25,400 shares or less than 0.1% of the company. Geoffrey Jervis is Chief Financial Officer, Treasurer and Assistant Secretary.

Insider buying by calendar month

Here is a table of Blackstone Mortgage Trust's insider trading activity by calendar month.

Month Insider buying / shares Insider selling / shares
May 2013 2,026,085 0
April 2013 0 0
March 2013 0 0
February 2013 0 0
January 2013 0 0
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The month of May has seen all of the insider buying this year.

Financials

The company reported the first-quarter financial results on May 6 with the following highlights:

Net loss $3.1 million
Book value $25.21 per share
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On May 29, the company announced the closing of its previously announced public offering of class A common stock for aggregate gross proceeds of approximately $660 million.

Competition

Blackstone Mortgage Trust is engaged in a competitive business. In its lending and investment activities, Blackstone Mortgage Trust competes for opportunities with a variety of institutional lenders and investors, including other REITs, specialty finance companies, public and private funds (including other funds managed by affiliates of Blackstone), commercial and investment banks, commercial finance and insurance companies and other financial institutions. Several other REITs have raised, or are expected to raise, significant amounts of capital, and may have investment objectives that overlap with Blackstone Mortgage Trust's, which may create additional competition for lending and investment opportunities. Some competitors may have a lower cost of funds and access to funding sources that are not available to Blackstone Mortgage Trust, such as the U.S. Government. Many of Blackstone Mortgage Trust's competitors are not subject to the operating constraints associated with REIT rule compliance or maintenance of an exclusion from regulation under the Investment Company Act. In addition, some of Blackstone Mortgage Trust's competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of loans and investments, offer more attractive pricing or other terms and establish more relationships than Blackstone Mortgage Trust. Furthermore, competition for originations of and investments in Blackstone Mortgage Trust's target assets may lead to decreasing yields, which may further limit Blackstone Mortgage Trust's ability to generate desired returns.

My analysis

There have been six different insiders buying the shares and there have not been any insiders selling the shares during the last 30 days. The company has an insider ownership of 0.61%. There is one analyst buy rating, one neutral rating and zero sell ratings with an average target price of $29.00. The company has a book value of $25.21 per share, which could be a good entry point for the stock.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.