Seeking Alpha
Long/short equity, insider ownership
Profile| Send Message|
( followers)  

When insiders buy shares on the open market, their companies are usually undervalued. Corporate insiders often have the inside track on their companies' prospects. Insiders probably wouldn't risk investing too much of their own money into their own companies unless they thought the stock might rise.

I screened for companies where at least one insider made an insider buy worth over $1 million filed on July 27. Here are three stocks that I found:

1. Navistar International Corporation (NYSE:NAV) is a holding company whose subsidiaries and affiliates produce International brand commercial and military trucks, MaxxForce brand diesel engines, IC Bus brand school and commercial buses, Monaco RV brands of recreational vehicles, and Workhorse brand chassis for motor homes and step vans. The company is also a private-label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. It also provides truck and diesel engine service parts, another affiliate offers financing services.

Click to enlarge

Insider buys

  • Carl Icahn purchased 285,901 shares on July 25-26. Carl Icahn currently controls 10,250,500 shares of Navistar. The company has 68.7 million shares outstanding, which makes Carl Icahn a 14.9% owner of the company. As of March 2012, Carl Icahn's net worth was estimated to be $14 billion.
  • Dr. Mark H. Rachesky, M.D., purchased 914,163 shares through his funds on July 9 and currently controls 14.95% of the company. Dr. Rachesky co-founded MHR Fund Management in 1996 and serves as its President. He served at Icahn Holding Corp. from February 1, 1990, to June 11, 1996, as the Managing Director.
  • Franklin Resources Inc. (NYSE:BEN) filed a 18.8% ownership on July 10. Franklin Resources was a 12.4% owner as of May 10. Franklin Resources is a global investment management organization known as Franklin Templeton Investments. The company has an extensive global presence, including offices in over 30 countries and clients in more than 150.

My analysis

I wrote an article about Navistar on June 9. The stock has a $18 price target from the Point&Figure chart. The three largest shareholders control 49% of the company.

2. Puma Biotechnology (NYSE:PBYI) is a development stage biopharmaceutical company that acquires and develops innovative products for the treatment of various forms of cancer. The company focuses on in-licensing drug candidates that are undergoing or have already completed initial clinical testing for the treatment of cancer and then seeks to further develop those drug candidates for commercial use. The company is initially focused on the development of PB272 (oral neratinib), a potent irreversible tyrosine kinase inhibitor, for the treatment of patients with HER2 positive metastatic breast cancer.

Pipeline

Neratinib (PB272) is a potent irreversible tyrosine kinase inhibitor that blocks signal transduction through the epidermal growth factor receptors HER1, HER2 and HER4. The company believes neratinib has clinical application in the treatment of several cancers, including breast cancer and gastric cancer and other tumor types that overexpress HER2. The company's initial focus is on the development of neratinib as an oral treatment of patients with HER2 positive metastatic breast cancer.

Upcoming milestones

The company expects to report additional data during 2012 from the Phase I/II trial of neratinib in combination with the anti-cancer drug temsirolimus, or Torisel, in patients with HER2 positive metastatic breast cancer who have failed multiple prior treatments.

Financials

The company reported first quarter results on May 15, 2012. Some highlights for first quarter ending March 31, 2012, include:

Cash$50 million
Net loss per share$0.59
Cash per share$2.50

Insider buys

  • Adage Capital Partners purchased 465,400 shares on July 25 and currently holds 4,432,519 shares of the company. Adage Capital Partners is a 10% owner according to SEC filings.
  • Thomas Malley purchased 20,000 shares on June 7-11 and currently holds 146,551 shares of the company. Mr. Malley has been a director since October 4, 2011.

My analysis

The stock has only three months of price history. My outlook for the stock is neutral currently.

3. Newcastle Investment Corp. (NYSE:NCT) is a publicly traded real estate investment and finance company that invests in and manages a diverse portfolio consisting primarily of real estate securities.

Insider buys

  • Randal Nardone purchased 150,000 shares through a secondary offering on July 26 and currently controls 4,854,786 shares of the company. Randal Nardone has been the company's Secretary since inception.
  • Wesley Edens purchased 300,000 shares through a secondary offering on July 26 and currently controls 5,944,191 shares of the company. Wesley Edens has been Chairman of the company's board of directors since inception. Mr. Edens also served as the company's Chief Executive Officer from inception until February 2007.

Financials

The company reported its first-quarter financial results with the following highlights:

Core earnings$0.33 per share
Dividend$0.20
Unrestricted cash to invest$51 million

The company will release its second-quarter financial results for the period ended June 30, 2012, on Thursday, August 9, 2012 at approximately 6:00 A.M. Eastern Time.

My analysis

The stock has a $14.5 price target from the Point&Figure chart and a 11.4% dividend yield. I believe the target price is achievable during next 12-24 months.

Source: 3 Major Insider Buys Filed On July 27