- Looking at Barron's top insider buy and sells list this weekend shows insider selling continues to swamp insider buying right now.
- What insider buying there is in the market was concentrated in the small cap universe this week.
- Two attractive small caps stand out for recent insider buying as well as their potential for appreciation in the market.
It has been a busy week and I am just now getting around to going through the Barron's top insider buys and sells list of the week. A few things stand out. First, insider selling is robust with 20 companies showing over $5mm in insider selling over the last reported week. This is swamping the six companies showing at least $1mm worth of insider buying over the same time period.
Second, insider buying seems to be concentrated in the small cap equity universe in the last reported week. This is encouraging given how much this space has underperformed its larger brethren over the past few months. Looking through the list, a couple of small caps stand out as attractive investments to me.
Sonus Networks (NASDAQ:SONS) designs and manufactures key components to enable VOIP solutions, and it is benefiting from the build-out of 4G networks as well. The company manufactures both lower-margin gateway equipment and higher-margin session border controller (SBC) products. The company has a market capitalization currently of $800mm.
This small cap tech firm has had some significant insider buying recently. The company's CEO bought one million shares at the end of April. The CFO also added 15,000 shares to his personal stake in that same time frame.
The stock currently goes for ~$3.20 a share. Jefferies recently came out with a gushing report on Sonus with its analyst calling the company "one of the most underappreciated stories in the technology sector today." Jefferies believes the stock can hit $10 a share by 2017 as the company executes against strategic plans to move from just under 3% operating margins currently to ~10% over that time frame.
Sonus made just two cents a share in FY2013 but should have a profit of over a nickel a share in FY2014. The current consensus has the company making 12 cents a share in FY2015. Revenues look set to increase 8% to 10% annually over the next two years. Over 20% of company's market capitalization is represented by net cash on its balance sheet.
JMP Group Inc. (NYSE:JMP) is a full-service investment banking and asset management firm that provides investment banking, sales and trading, and equity research services to corporate and institutional clients as well as alternative asset management products to institutional and high-net-worth investors.
This is one of the most under the radar stocks I have seen in a while. This is ironic given the firm provides investment coverage on over 350 equities. Only one analyst even covers this stock currently according to Yahoo! Finance. The company has a market capitalization of around $150mm.
Earnings look to be tracking to post a 20% year-over-year gain this year. Numerous Insiders have added some $400K worth of the shares over the past two weeks. The company has a well-diversified income stream and impressively has managed to grow revenues at an 8% CAGR over the past seven years, which includes the financial crisis. The shares look cheap at around 9x forward earnings. The stock also provides a 3% dividend yield after recently boosting its payout by 11%.