Each week I highlight large CEO purchases of company shares. This week there are six stocks with CEO buys of at least $98,000. A few were much larger, but I wanted to include the Air Lease (AL) purchase, which was at the lower end of the range. Three of these purchases were from stock offerings.
I like to look at CEO purchases to generate ideas. Sometimes you’ll find that these purchases predict something positive in the near term. They don’t exist in a vacuum, but if there is an unusual purchase, either in size or timing, I’ll take notice and look deeper into the company. I’ve offered a few thoughts below.
The six stocks with recent CEO buys of at least $98,000 are as follows:
Tesoro Logistics, LP (TLLP): Tesoro Logistics is a subsidiary of Tesoro Corporation. The company had an IPO on April 20 when the partnership offered 13 million units for $21. Open market trading started at $23.25. CEO Gregory Goff bought 11,675 units on April 28 and 29 for $23.75. Bill Simpson had a nice write-up that went up after the IPO, but which had his pre-IPO thoughts. I encourage you to take a look here.
Bill recommends purchasing it and expects a 6.75% yield. This is higher than four other refined products pipeline and terminal MLPs. If this is your thing, Texas Logistics looks attractive relative to peers.
First Horizon National Corp. (FHN): CEO Bryan Jordan bought 10,000 shares of First Horizon on April 28 for $10.76. In total, he owns 681,223 shares. Reading through the bank's quarterly conference call from a few weeks ago, conditions seem to be improving for First Horizon National. Diluted EPS was $0.15, which is an impressive turnaround. The bank announced on January 21 that it had repaid TARP. Share issuance and slow growth has hurt its tangible book value. Shares are $3 lower than where they were a year ago, and appear to be an attractive entry point.
Franklin Financial Corp. (FRNK): Franklin Financial is a small bank in and around Richmond, VA. The bank closed on a stock offering on April 27, issuing shares at $10. CEO Richard Wheeler participated in the offering by buying 100,000 shares. This is a small one, and I wasn’t able to find too much information on it. Shares are trading above $12 right now, though, so initial purchases have made out well.
Air Lease Corp. (AL): Air Lease is another recent IPO. This aircraft leasing company priced more than 30 million shares at $26.50. CEO Steven Udvar-Hazy bought 1,000 shares during the offering, but that was a small purchase compared to his total ownership. In total he and his related entities own more than a million shares. Udvar-Hazy used to be the Chairman and CEO of International Lease Finance (ILF), which was a subsidiary of AIG (AIG). He attempted to buy back the company from AIG in 2009. He had founded ILF and had previously sold it to AIG. His attempt was rebuffed. He’s a legend in the aircraft leasing business, and will attempt to create a new success with Air Lease. As long as credit continues to loosen up, this one could be a good bet under his leadership.
MGIC Investment Corp. (MTG): CEO Curt Culver bought 40,000 shares on April 21 at an average price of $7.76. This was just the day after the company announced first quarter results. MGIC is an investment holding company which primarily provides private mortgage insurance. It’s trading just above book value. When times are good, the stock generally traded above 1.5 times book, but times are certainly not good for this market now.
Hasbro (HAS): The CEO of this toymaker, Brian Goldner, bought 10,000 shares for $44.85 on April 21. He owns more than 240,000 shares in total. Hasbro’s recent earnings disappointed, but the company did beat on the top line. Shares traded up on news that Mattel (MAT) had lost a court battle over the Bratz brand. The dividend yield is 2.6%, but shares don’t appear to be particularly cheap to me.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.