Seeking Alpha
Long/short equity, insider ownership
Profile| Send Message|
( followers)  

In this article, I will feature one real estate investment trust 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%.

ZAIS Financial (NYSE:ZFC) is a externally-managed and advised real estate investment trust (REIT) that invests in, finances and manages a diversified portfolio of residential mortgage assets, other real estate-related securities and financial assets.

(click to enlarge)

Insider buying during the last 30 days

  • Eric Reimer purchased 9,500 shares on September 3-4 and currently holds 9,500 shares or 0.1% of the company. Eric Reimer serves as a director of the company. Eric Reimer increased his holdings from zero shares to 9,500 shares in September.
  • James Zinn purchased 3,200 shares on September 4 and currently holds 3,200 shares or less than 0.1% of the company. James Zinn serves as a director of the company. James Zinn increased his holdings from zero shares to 3,200 shares in September.
  • Christian Zugel purchased 30,000 shares on September 3 and currently holds 82,911 shares or 1.0% of the company. Christian Zugel serves as Chairman of the Board. Christian Zugel increased his holdings by 56.7% in September.
  • Marran Ogilvie purchased 2,400 shares on September 3-4 and currently holds 3,150 shares or less than 0.1% of the company. Marran Ogilvie serves as a director of the company. Marran Ogilvie increased her holdings by 320% in September.
  • Daniel Mudge purchased 3,000 shares on September 3 and currently holds 3,000 shares or less than 0.1% of the company. Daniel Mudge serves as a director of the company. Daniel Mudge increased his holdings from zero shares to 3,000 shares in September.
  • Michael Szymanski purchased 6,400 shares on September 3 and currently holds 22,646 shares or 0.3% of the company. Michael Szymanski serves as Chief Executive Officer, President and Director. Michael Szymanski increased his holdings by 39.4% in September.
  • Brian Hargrave purchased 1,000 shares on September 4 and currently holds 6,499 shares or less than 0.1% of the company. Brian Hargrave serves as Chief Investment Officer. Brian Hargrave increased his holdings by 18.2% in September.

Insider buying by calendar month

Here is a table of ZAIS Financial's insider-trading activity by calendar month.

MonthInsider buying / sharesInsider selling / shares
September 201355,5000
August 201300
July 201300
June 201300
May 201300
April 20137500
March 201300
February 201321,0000

There have been 77,250 shares purchased and there have been zero shares sold by the insiders this year.

Financials

ZAIS Financial reported the second-quarter financial results on August 13 with the following highlights:

Core earnings$2.9 million
Net loss$7.6 million
Book value$19.95 per share

(click to enlarge)

Outlook

ZAIS Financial continues to favor credit oriented investment strategies in the residential mortgage space. ZAIS Financial expects to increase its equity allocation to whole loans, to the targeted levels of 50% to 60% in the third quarter and at the same time ZAIS Financial expects to reduce its agency RMBS allocation to a relatively small liquidity bucket representing 0% to 5% of equity.

(click to enlarge)

Competition

ZAIS Financial's competitors include Starwood Property Trust (NYSE:STWD). Here is a table comparing these two companies.

CompanyZFCSTWD
Market Cap:124.89M4.11B
Qtrly Rev Growth (yoy):N/A1.05
Revenue:9.89M321.80M
Gross Margin:0.990.78
Operating Margin:0.520.61
Net Income:4.76M229.36M
EPS:1.061.67
P/E:14.8014.77
P/S:12.6712.71

ZAIS Financial's P/S ratio is in line with its direct competitors. Starwood Property Trust has seen two insider sell transactions this year. Starwood Property Trust is trading above the book value and has a dividend yield of 7.45%.

Conclusion

There have been seven different insiders buying ZAIS Financial and there have not been any insiders selling ZAIS Financial during the last 30 days. All seven of these insiders increased their holdings by more than 10%. ZAIS Financial has an insider ownership of 1.48%.

There are five analyst buy ratings, one neutral rating and zero sell ratings with an average target price of $22.50. ZAIS Financial has a book value of $19.95 per share and the stock has a dividend yield of 11.49%. I believe the stock could be a good pick below the book value of $19.95 per share.

Source: Insiders Are Buying ZAIS Financial