Insiders Are Buying Silver Bay Realty Trust

Aug.16.13 | About: Silver Bay (SBY)

The Vanguard REIT Index ETF (NYSEARCA:VNQ) was trading as low as $19.95 in March 2009. The index is currently trading at $65.45 or 228.1% above the low made in March 2009.

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In this article, I will feature one REIT that has 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%.

Silver Bay Realty Trust Corp (NYSE:SBY) is a Maryland corporation focused on the acquisition, renovation, leasing and management of single-family properties for rental income and long-term capital appreciation. Silver Bay currently owns single-family properties in Arizona, California, Florida, Georgia, Nevada, North Carolina, Ohio, and Texas. Silver Bay has elected to be taxed as a REIT for U.S. federal tax purposes.

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Insider buying by insider (last 30 days)

  • Timothy O'Brien purchased 2,000 shares on August 15, and currently holds 9,714 shares or less than 0.1% of the company. Timothy O'Brien has been General Counsel and Secretary since Silver Bay's incorporation in July 2012.
  • Irvin Kessler purchased 41,500 shares on August 12-13, and currently controls 2,210,295 shares or 5.6% of the company. Irvin Kessler serves as a director of the company.
  • David Miller purchased 5,000 shares on August 13, and currently holds 32,770 shares or less than 0.1% of the company. David Miller is President and CEO of the company.

Insider buying by calendar month

Here is a table of Silver Bay Realty Trust's insider-trading activity by calendar month.

Month Insider buying / shares Insider selling / shares
August 2013 48,500 0
July 2013 0 0
June 2013 0 0
May 2013 68,191 0
April 2013 0 0
March 2013 37,754 0
February 2013 0 0
January 2013 0 0
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There have been 154,445 shares purchased and there have been zero shares sold by the insiders this year.

Financials

The company reported the second-quarter financial results on August 7, with the following highlights:

Revenue $10.7 million
Net operating income $3.1 million
Net Asset Value $18.95 per share
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Outlook

Silver Bay's investment thesis is predicated on buying assets below replacement costs in geographies that will benefit from strong demographic and economic growth. These factors will ultimately be the primary drivers of housing price and rents appreciation. Silver Bay believes it is well positioned to deliver attractive total returns under a variety of macro scenarios.

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Competition

Silver Bay's competitors include American Residential Properties (NYSE:ARPI). Here is a table comparing these two companies.

Conclusion SBY ARPI
Market Cap: 610.31M 556.07M
Employees: N/A 45
Qtrly Rev Growth (yoy): 245.37 N/A
Revenue: 21.93M 4.02M
Gross Margin: 0.11 0.13
EBITDA: -7.54M -5.91M
Operating Margin: -0.82 -2.07
Net Income: -13.98M -8.19M
P/S: 27.80 139.86
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Silver Bay is trading at a lower P/S multiple than American Residential Properties. American Residential Properties has seen three insider buy transactions this year.

Conclusion

There have been three different insiders buying Silver Bay and there have not been any insiders selling Silver Bay during the last 30 days. Two out of these three insiders increased their holdings by more than 10%. Silver Bay has an insider ownership of 0.40%. There are four analyst buy ratings, two neutral ratings and zero sell ratings with an average target price of $21.50. Silver Bay has a book value of $17.30 per share and the stock has a dividend yield of 0.26%. I believe the stock could be a good pick below the book value.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in SBY over 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.