Market drops over the past month have brought a lot of insider buying. I like to look at CEO and CFO buys, since those two individuals should have the best handle on whether their company’s stock is over or undervalued. CFOs have been making a large number of purchases lately. This week we have eight stocks with CFO buys of greater than $40,000. Many of these stocks have been very volatile and are at the lower end of their 52-week ranges. That doesn’t mean they can’t drop lower, but it does mean that the CFOs believe that the market sell-off may have been overdone. Information is from SECForm4.com.
MGIC Investment Corp. (MTG): MGIC hit new 52-week lows last week before rocketing upward. Shares are now 67% higher. CFO J. Michael Lauer had bought 20,000 shares on August 26 at $2.34 per share. Lauer has been making regular purchases since April, even buying when shares were at $7.70. MGIC provides private mortgage insurance. The prospects of a poor economy and continued difficulty in the housing markets are causing this stock to be extremely volatile. I’m not able to value the company, but the high number of insider buys suggest insiders may know something we don’t.
First Solar (FSLR): CFO Mark Widmar bought 1,000 shares on August 24. This was his first company purchase. Widmar spent $91.75 per share, making the total purchase equal $91,750. This former high-flying stock has bounced off 52-week lows and now trades nearly 11% higher than when Widmar bought the stock.
Provident Financial Services (PFS): CFO Thomas Lyons bought 4,000 shares at $11.11 on August 22. This $703 million market cap bank has a nice 4% yield and trades at a reasonable 1.25 times tangible book. Provident was established in 1839 and has about 80 branches throughout New Jersey.
IEC Electronics (IEC): IEC is a tiny $50 million market cap electronic manufacturing service provider. I highlighted CFO Susan Topel-Samek’s buys back in February. Shares are considerably cheaper now, despite continued solid earnings. Shares are 48% off their 52-week highs. Topel-Samek’s husband bought 10,000 more shares on August 22 at an average price of $5.08. Be careful here, because volume is very light. However, shares appear cheap.
Central European Media Enterprises (CETV): Like IEC, CETV CFO David Sach also has bought shares on more than one occasion this year. Most recently Sach bought 20,000 shares on August 19 for $12 per share. This $818 million market cap company provides broadcasting, internet, and television content in Central and Eastern Europe.
Triangle Petroleum (TPLM): Triangle Petroleum has been a volatile stock in the past year. Just in the past month it has traded between $3.75 and $7.50. This company is focused on the Bakken Shale and Three Forks shale oil formations. Canaccord thinks shares are worth $10. Four insiders may agree. They bought shares in the past few weeks, including CFO Jonathan Samuels. Samuels has bought 30,000 shares between August 16 and August 22. His average purchase price is $5.08.
Lincare Holdings (LNCR): CFO Paul Gabos bought 25,000 shares on August 22 for $505,500. This is the first insider buy for the company in at least two years. Lincare provides oxygen and respiratory therapy services to patients. Its market cap is $2 billion, and shares yield an attractive 3.9%. The stock is just off 52-week lows and trades at a reasonable valuation.
Pinnacle Entertainment (PNK): Five Pinnacle Entertainment insiders have made purchases this month, including CFO Carlos Ruizsanchez. He bought 10,000 shares between August 19 and 22 at an average price of $11.40 per share. Pinnacle is a $784 million market cap casino and race track operator. Shares are currently trading 12% higher than when Ruizsanchez bought the stock.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.