Each week I highlight large insider purchases made by the CEO. These purchases must not be option grants or exercises. I prefer to track insider buying at the CEO and CFO level, rather than at the Board level, because management should have a better idea of what’s going on in the day-to-day operation of the company. An insider buys company shares because they have confidence in the company and the stock, and occasionally these purchases foreshadow a coming catalyst.
At the same time, these insiders are humans and can get caught up in the market and may be blind to problems within their own company. This list should be treated as a handy starting point for doing research, not the final step. Last week’s edition featured CEO purchases of more than $200,000. You can see those stocks here. This week we’re back to the $100,000 level, and we have 7 stocks:
Sanders Morris Harris Group (SMHG): This is an interesting stock. The company will be changing its name to The Edelman Financial Group and elevated president Ric Edelman to be a co-CEO with current CEO, George Ball. The plan is for Ball to step aside in a year or so. The company is a rapidly expanding wealth management group that purchased the privately held Edelman Group a few years ago. Ric Edelman is the star, and the company is giving him the reigns. George Ball certainly is on board with the move, and recently made three purchases on March 22 and 23 totaling 55,000 shares. Those transactions totaled about $386,000. Ric Edelman also made a purchase of 100,000 shares on March 17. Those shares are worth $692,000. These transactions of more than $1 million show how bullish the leadership is in the company and in the CEO transition.
Winmark Corp. (WINA): Winmark owns consignment and other retail stores that buy, sell, and trade products. Brands include Play it Again Sports, Plato's Closet, and Once Upon a Child. Shares are at 52 week highs. CEO John Morgan purchased 5,000 shares on March 22, and 3,000 shares on March 18. These two purchases totaled about $188,000. Morgan is a regular share purchaser, and also purchased company shares in 2011 on March 8 and January 19.
Dell Inc. (DELL): There has been some commentary in the value investing community about how cheap Dell shares are. With a P/E of 11 and a ton of cash, it certainly looks like a tempting stock. CEO and founder Michael Dell made a huge purchase of company shares on March 18. He bought $150 million of shares priced at $14.37. This follows a $100 million purchase of shares on December 20. Nothing says that someone has faith in their company like $250 million of insider buying. I had to chuckle when I thought of GE’s Jeffrey Immelt trying to inspire confidence in GE’s shares back on March 1. He bought $844,000 worth, which is basically chump change compared to his net worth. Conversely, Michael Dell isn’t messing around here like Immelt may have been.
THQ Inc. (THQI): THQI is entertainment software developer that creates games for systems like Playstation, Nintendo, and Xbox, as well computer and mobile games. The company is relatively small and sports a market cap of $310 million. Chairman and CEO Brian Farrell bought 25,000 shares on March 18 at $4.67 per share.
Hatteras Financial (HTS): Hatteras Financial CEO Michael Hough bought 5,000 shares in a secondary offering on March 18. He was joined by 6 other insiders. Shares were priced at $28.50 and the company raised more than $413 million. Hatteras is a REIT that invests in agency mortgage backed securities. Last year’s yield was more than 15% and extrapolating last quarter’s dividend, it would work out to 13%. Borrowing money at a low interest rate and buying 100% government backed securities is a good gig while it lasts. This big secondary shows that management still sees opportunity in the near term.
K-Swiss (KSWS): There’s something going on in the shoe industry. I’ve seen insider buys across many shoe-related companies in the past few weeks. The K-Swiss buy is a big one. CEO Steven Nichols bought 50,000 shares on March 17 and now owns more than 177,000 shares. This transaction totaled $447,500. Shares are already up 10% since then. The fundamentals don’t seem solid here, but perhaps a deeper look may discover something Nichols knows that isn’t obvious on the surface.
Bruker Corp. (BRKR): CEO Frank Laukien bought 10,000 shares on March 17 at $18.59 per share. He owns nearly 39 million shares, so this was a tiny transaction for him. There were also a few large recent sales from two directors, so this insider buy may not be telling us much. Bruker makes scientific instruments such as X-ray machines and has a market cap of $3.1 billion.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.