Today, I present you notable bullish insider transactions for the last 13 weeks.
1) Yahoo! Inc. (YHOO)
Only a few days after this announcement of Marissa Mayer becoming CEO of Yahoo (17 July 2012), we saw an interesting insider buying activity (20 July 2012) (Chart 1).
|Chart 1: Yahoo Insider Buying Activity|
Daniel Seth Loeb, a hedge fund manager and founder of Third Point LLC, has acquired a record amount of Yahoo shares: approximately US$40 million worth of shares or 0.2% of the company. This means Third Point LLC owns 6% of Yahoo at this moment. Another notable director of Yahoo, Michael Wolf, bought US$380,000 worth of shares.
Yahoo's net earnings have slumped 4.4% in the latest second quarter due to restructuring costs, but its revenues from Asia are improving.
I don't think Yahoo is particularly inexpensive with the high P/E ratio of 18. But the latest Alibaba deal, where Yahoo is selling its 40% stake to Alibaba, might be a welcome event for shareholders. The proceeds could be used for stock buybacks and Yahoo can focus itself more on domestic challenges. I'm neutral on Yahoo.
2) JPMorgan Chase & Co. (JPM)
This bank is one of the most important U.S. banks out there. It is supposed to be the most sound U.S. bank and also has the most assets on its balance sheet. JPMorgan Chase has been under a lot of pressure lately due to the Jamie Dimon trading scandal.
Even though JPMorgan Chase had a blow to its reputation, Jamie Dimon purchased a huge amount of stock with a value of US$17 million months after the heights of this scandal.
|Chart 2: J.P. Morgan Chase Insider Buying Activity|
JPMorgan Chase had fallen 20% since the news about the US$9 billion trading losses, but recovered almost 10% since Jamie Dimon bought shares (Chart 2).
In general, I don't recommend investors to buy financials, but maybe Jamie Dimon knows more about the value of his own company (and the backdoor). I'm neutral on JPMorgan Chase.
3) Hewlett-Packard Co. (HPQ)
Hewlett-Packard is mostly known for its printers and software solutions. The company's share price has been dropping a lot due to a series of bad news. First it announced to divest its PC and tablet business, after which HP dropped almost 30%. Then a few months later it announced its earnings outlook for Q3 which were below estimates. Then it announced more job cuts around the world.
Today, HP's shares have dropped so much that the valuations are getting better and better. P/E is about 7 and the dividend is at 3%. This is also confirmed by the latest insider transactions (Chart 3).
|Chart 3: Hewlett Packard Insider Buying Activity|
Ralph Withworth bought US$400 million of shares between May and June 2012. Since then, the shares have continued to move down another 18%.
Investors can try to pick the bottom in HP shares. I like the fundamentals of this company and a turnaround could occur soon. Recommended buy.
4) Akamai Technologies, Inc. (AKAM)
Akamai provides content delivery and cloud infrastructure services for the delivery of content and applications over the Internet.
We registered buying activity from Leighton Thomson (professor of Applied Mathematics at the Massachusetts Institute of Technology and co-founder of Akamai) on 27 April 2012 in the amount of US$3.3 million and 05 June 2012 in the amount of US$4 million.
|Chart 4: Akamai Technologies Insider Buying Activity|
What's notable is that Akamai Technologies dropped 20% since its previous earnings release on 25 April 2012 and the announcement of the leave of Paul Sagan end 2013. After this drop, Leighton Thomson bought his shares (Chart 4), indicating the value in the shares. Shortly thereafter, on 26 July 2012, the company released excellent Q2 results after which the shares climbed almost 30%.
I believe Akamai Technologies is a very solid company and am neutral on the stock. Recommended hold.
5) Sipef (EBR:SIP)
Sipef is a Belgian company with operations in Indonesia. Its business is mainly focused on agricultural products like palm oil, rubber, tea.
The most important indicator here is the palm oil price, which has slumped lately (Chart 5a).
|Chart 5a: Palm oil price|
Sipef has a very low P/E ratio of 7.4 and pays a dividend of 2%. What I like about Sipef is that it is located in Indonesia, which is a very good area for everything that has to do with agriculture. I believe its principal product palm oil will be in great demand as China continues to grow in the future.
Insider buying confirms my suspicions of an undervaluation of the shares (Chart 5b). In May 2012, a lot of directors of Sipef bought a significant amount of shares.
|Chart 5b: Sipef Insider Buying Activity|
Today, the share price hasn't gone up yet, so it's a good time to invest in this company. Recommended buy.