Many stocks are looking cheap now thanks to a swift correction in the market. This has brought out a number of insiders who are suddenly making large investments by buying shares of the companies they work for and manage. Since most insiders already receive stock options and awards, it's often a sign of real value when they dip into their own wallets to buy even more stock. I have sorted through a number of recent transactions and focused on stocks that trade below $6 per share because low-priced stocks often see big rebounds in terms of percentage gains. Here are a few stocks to consider buying based on the significant and recent insider buys:
Radian Group, Inc. (RDN) shares have plunged from about the $4.50 level in March, to just around $2 in recent days. Since this company offers mortgage insurance, it has been challenged by the weak housing market and it has been reporting losses. Radian shares spiked up on news that a large investor is demanding that the company put itself up for sale. At least a couple of insiders seem to feel the stock is deeply undervalued and they have been buying. On May 3, 2012, Noel Spiegel, a director, bought 10,000 shares in a transaction valued at about $22,900. Also, Sanford Ibrahim, an officer, bought 25,000 shares on May 3, 2012, in a transaction valued at about $57,250. This stock appears to be highly speculative, but if the housing market improves, big gains are possible.
Here are some key points for RDN:
- Current share price: $2.83
- The 52 week range is $1.80 to $5.21
- Earnings estimates for 2012: a loss of $2.65 per share
- Earnings estimates for 2013: a loss of 28 cents per share
- Annual dividend: 1 cent per share which yields .5%
RAIT Financial Trust (RAS) shares topped out earlier this year around $6, and now trade for close to $4. This company is a real estate investment trust that primarily invests in commercial real estate. It also manages commercial properties for other companies. The commercial real estate sector is healthier than the residential sector so investors might be missing out on a potential turnaround bargain by selling this stock for just $4 per share. With a dividend yield of 8% and with the book value of $16.98, this stock appears to be a real value and at least one insider is buying shares: On May 17, 2012, Rima Senvest Management, LLC, (an owner of over 10% of the company) bought 77,117 shares in a transaction valued at about $307,696. Also, this company has made additional significant purchases recently and it bought 45,651 shares on May 16, 2012, in a transaction valued at about $185,343.
Here are some key points for RAS:
- Current share price: $4.08
- The 52 week range is $2.90 to $7.31
- Earnings estimates for 2012: $1 per share
- Earnings estimates for 2013: $1.10 per share
- Annual dividend: 32 cents per share which yields 8%
Genworth Financial, Inc. (GNW) shares have been hit hard in recent weeks after the company announced weaker than expected results and the delay of the Australian mortgage unit which was supposed to be spun-off in an initial public offering. The CEO Michael Fraizer also resigned. Genworth earned $47 million in the first quarter of 2012, or about 9 cents per share. While some investors are selling off their shares of Genworth in recent days, multiple insiders see this decline as a buying opportunity. Michel Perrault, an officer, bought 2,000 shares on May 18, 2012, in a transaction valued at about $9,720. Also, James A. Parke, a director, bought 25,000 shares on May 18, 2012, in a transaction valued at about $125,250.
Here are some key points for GNW:
- Current share price: $5.39
- The 52 week range is $4.80 to $11.30
- Earnings estimates for 2012: 80 cents per share
- Earnings estimates for 2013: $1.45 per share
- Annual dividend: None
Data is sourced from Yahoo Finance.
Disclaimer: No guarantees or representations are made. Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for informational purposes only. You should always consult a financial advisor.