Intensive Insider Buying In Annaly Capital Management: Good Entry Point?

Nov.14.13 | About: Annaly Capital (NLY)

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%.

Annaly Capital Management (NYSE:NLY) owns, manages, and finances a portfolio of real estate related investments in United States.

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Insider buying during the last 30 days

Here is a table of Annaly's insider-trading activity during the last 30 days by insider.

Name Title Trade Date Shares Purchased Current Ownership Increase In Shares
James Fortescue COO Nov 11 25,000 160,261 shares +18.5%
Kevin Keyes President Nov 12 100,000 300,000 shares +50.0%
Wellington Denahan CEO Nov 8 93,000 1,288,081 shares +7.8%
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There have been 218,000 shares purchased by insiders during the last 30 days.

Insider buying by calendar month

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

Month Insider buying / shares Insider selling / shares
November 2013 218,000 0
October 2013 0 0
September 2013 0 0
August 2013 217,818 0
July 2013 0 0
June 2013 0 0
May 2013 25,000 0
April 2013 0 0
March 2013 0 0
February 2013 0 0
January 2013 0 0
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There have been 460,818 shares purchased and there have been zero shares sold by insiders this year. The month of November has seen the most insider buying.

Financials

Annaly reported the third-quarter financial results on November 6 with the following highlights:

Net income $192.5 million
Core earnings $282.3 million
Book value $12.70 per share
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Competition

Annaly's competitors include American Capital Agency (NASDAQ:AGNC), Starwood Property Trust (NYSE:STWD), and Two Harbors Investment Corp. (NYSE:TWO). Here is a table comparing these companies.

Company NLY AGNC STWD TWO Industry Average (REIT-Diversified)
Market Cap: 10.15B 8.23B 4.33B 3.42B 940.05M
Employees: 147 N/A N/A N/A 353.00
Revenue: 3.91B 1.92B 321.80M 691.20M 265.61M
Gross Margin: 1.00 1.00 0.78 1.00 0.67
Operating Margin: 0.94 0.91 0.61 0.89 0.34
Net Income: 3.37B 2.16B 229.36M 518.27M N/A
EPS: 3.48 5.81 1.67 1.58 0.20
P/E: 3.08 3.69 15.55 5.94 126.73
PEG (5 yr expected): 2.73 N/A N/A N/A 3.20
P/S: 2.60 4.29 13.45 4.94 4.52
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Annaly has the lowest P/S ratio among these four companies.

Here is a table of these competitors' insider-trading activities this year.

Company Insider buying / shares Insider selling / shares
AGNC 72,000 8,731
STWD 0 3,811
TWO 43,600 0
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Only Annaly has seen intensive insider buying during the last 30 days.

Conclusion

There have been three different insiders buying Annaly and there have not been any insiders selling Annaly during the last 30 days. Two of these three insiders increased their holdings by more than 10%. Annaly has an insider ownership of 0.10%.

There are three analyst buy ratings, 14 neutral ratings, and two sell ratings with an average price target of $11.64. Annaly has a book value of $12.70 per share and the stock has a dividend yield of 13.06%. The stock is currently trading below the book value, which could be a good entry point for the stock based on the intensive insider buying.

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