The Insider Report

| About: Great Ajax (AJX)

Summary

Insider buying can be a valuable signal to predict future outperformance.

Recent insider buying at only one company stands out to me as particularly interesting.

The majority of insider trades don't make it into this report, as I don't think they are equally valuable as a signal.

Institutional/fund buying is excluded.

Between June 13 and June 17, there were two instances of insider buying that deserve attention - at Signet Jewelers (NYSE:SIG) and Great Ajax (NYSE:AJX). The first is a jeweler with an enterprise value of $8 billion and the second a tiny mREIT specializing in non-performing and re-performing mortgage loans. Let's start by reviewing the strength of the insider buying signal at Signet (data by Tipranks):

Steven J. Becker

CHRO

Informative Buy

475

$39,316

3 days ago

George Murray

Zale Division President

Informative Buy

1,100

$97,075

5 days ago

Mark Andrew Jenkins

Chief Corp Gov/Corp Secretary

Informative Buy

325

$27,544

5 days ago

Edward Hrabak

President of Sterling Division

Informative Buy

400

$35,300

5 days ago

Brenner Philip Joseph

Chief Information Officer

Informative Buy

850

$73,092

5 days ago

Michele Santana

CFO

Informative Buy

1,150

$99,487

5 days ago

Judith Lynn Dennison

Chief Legal, Corp Affairs

Informative Buy

500

$41,175

5 days ago

Mark Light

CEO, Director

Informative Buy

2,897

$249,750

11 day

Click to enlarge

Positives are the depth of the insider buying with many executives adding to their positions, the CFO and CEO buying, buying by female execs (explained in a prior issue).

SIG Chart

SIG data by YCharts

Decreasing the strength of the signal are the modest size of the insider purchases relative to executive compensation and the fact the insider buying follows a steep decline of the share price.

Great Ajax Corp

The insider buying at the microcap mREIT Great Ajax isn't as striking with only three insiders purchasing:

Doyle Mary B

Chief Financial Officer

Informative Buy

4,271

$55,907

5 days ago

Russell Schaub

PRESIDENT, Director

Informative Buy

7,547

$99,998

5 days ago

Lawrence Mendelsohn

CEO, Director

Informative Buy

18,000

$238,500

5 days ago

Click to enlarge

Positives include CEO and CFO buying, female exec buying and buying following an incredible surge in the stock price:

AJX Total Return Price Chart

AJX Total Return Price data by YCharts

Negatives are the relatively recent IPO. Insider ownership by % at Great Ajax is higher and the purchases are more relevant in light of executive compensation.

Summary

Gun to my head I believe the insider buying profile at Great Ajax to be more favorable. Because of the recent IPO, microcap stature and the questionable reputation of its industry segment, it is more likely to be mispriced. A company that's a great candidate for mispricing with a strong insider buying profile should be irresistible to research further. Colorado Wealth Management provides us with a great start.

Make sure to check out last week's Insider Report as well.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within 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.