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.
In this article, I will feature one company that has seen intensive insider buying during the last 30 days. Intensive insider buying can be defined by the following three criteria:
The stock is purchased by three or more insiders within one month.
The stock is sold by no insiders in the month of intensive purchasing.
At least two purchasers increase their holdings by more than 10%.
Armada Hoffler Properties (AHH) is a full service real estate company with extensive experience developing, building, owning and managing high-quality, institutional-grade office, retail and multifamily properties in markets throughout the Mid-Atlantic United States. The company has elected to be taxed as a real estate investment trust (REIT) for U.S. federal income tax purposes.
Insider buying by insider (last 30 days)
- Russell Kirk purchased 27,219 shares on August 20-22 and currently holds 30,697 shares or 0.2% of the company. Russell Kirk serves as a director of the company.
- Daniel Hoffler purchased 50,000 shares on August 20 and currently holds 54,348 shares or 0.3% of the company. Daniel Hoffler serves as Executive Chairman of the board of directors.
- Louis Haddad purchased 50,000 shares on August 20 and currently holds 51,000 shares or 0.3% of the company. Louis Haddad is President and Chief Executive Officer.
Insider buying by calendar month
Here is a table of Armada Hoffler's insider-trading activity by calendar month.
|Month||Insider buying / shares||Insider selling / shares|
There have been 162,046 shares purchased and there have been zero shares sold by the insiders since May 2013.
The company reported the pro forma second-quarter financial results on August 13 with the following highlights:
|Net income||$8.4 million|
|Core FFO||$6.5 million|
Armada Hoffler is trading below the industry average P/S ratio, which could explain some of the insider buying. Highwoods Properties has seen 18 insider sell transactions this year and Washington Real Estate Investment Trust has seen six insider sell transactions this year.
There have been three different insiders buying Armada Hoffler and there have not been any insiders selling Armada Hoffler during the last 30 days. All three of these insiders increased their holdings by more than 10%. There are two analyst buy ratings, one neutral rating and zero sell ratings with an average target price of $12.00. Armada Hoffler is trading at a P/E ratio of 24.80 and a forward P/E ratio of 11.42. Armada Hoffler has a dividend yield of 6.61%. I have a cautiously bullish bias for the stock currently based on the insider buying.