Insider buying is often a sign of potential positive developments within a company, particularly if the insiders who are buying have a good track record with respect to their own buying. This is, however, only a secondary indicator and should not be relied upon solely when making the decision whether or not to purchase a security. Insider buying in and of itself will not make a stock go higher, but can provide a further clue if all the other pieces of the puzzle (e.g., earnings, sales, return on equity, profit margins, etc.) are in place.
I screened for companies where at least one insider made a buy filed on August 10. I chose the top 5 companies with insider buying in dollar terms. Here are the five stocks:
1. Air Transport Services Group (ATSG) is a leading provider of air cargo transportation and related services to domestic and foreign air carriers and other companies that outsource their air cargo lift requirements. Through its principal subsidiaries, including three airlines with separate and distinct U.S. FAA Part 121 Air Carrier certificates, ATSG provides air cargo lift, aircraft leasing, aircraft maintenance services, airport ground services, fuel management, specialized transportation management, and air charter brokerage services.
Willem Mesdag purchased 762,695 shares on August 8 and currently controls 10,315,425 shares of the company. The company has 64.4 million shares outstanding which makes Willem Mesdag a 16% owner of the company.
The company reported the second-quarter financial results on August 2 with the following highlights:
|Earnings per share||$0.17|
ATSG's outlook for the second half of 2012 remains positive overall, as revenues, earnings and cash flow (as measured by our Adjusted EBITDA), are all expected to improve compared with the first half of the year.
Joe Hete, President and CEO of ATSG, said:
"We now expect Adjusted EBITDA from Continuing Operations for 2012 to be approximately $170 million. We will continue to aggressively pursue both cost savings and new business that can yield even stronger results in 2013 and beyond."
The stock gaped down from the earnings but has already recovered the losses. The stock has seen steady insider buying this year from the $4-$5 level. The stock trades currently at a forward P/E of 5.6.
2. Ruby Tuesday (RT) has company-owned and/or franchise Ruby Tuesday brand restaurants in 45 states, the District of Columbia, 12 foreign countries, and Guam. As of June 5, 2012, the company owned and operated 714 Ruby Tuesday restaurants and franchised 79 Ruby Tuesday restaurants, comprised of 36 domestic and 43 international restaurants.
- Steven Becker purchased 196,526 shares on August 8-10 and 222,800 shares on July 31-August 1. Mr. Becker has been a director of the company since 2011.
- Bernard Lanigan purchased 134,000 shares of the company on July 30 and currently controls 211,139 shares of the company. Mr. Lanigan has served as a director of the company since 2001.
The company reported the fiscal year 2012 fourth-quarter (ended June 5, 2012) financial results with the following highlights:
|Net loss||$0.09 per share|
Fiscal year 2013 guidance:
- The company estimates same-restaurant sales for company-owned restaurants will be in the range of flat to 2.0% for the year.
- Diluted earnings per share for the year are estimated to be in the $0.20 to $0.30 range, including the CEO pension expense and new CEO transition expenses. Excluding the impact of these items, diluted earnings per share for the year are estimated to be in the $0.24 to $0.34 range. Fully diluted weighted average shares outstanding are estimated to be approximately 63-64 million for the year.
The stock dipped following the earnings announcement on July 25 but has already recovered the losses. I believe the $5 level could be a good entry point for the stock if we do get a pullback. The stock was trading at a $15 level back in 2011.
3. PIMCO Dynamic Income Fund (PDI) seeks current income as a primary objective and capital appreciation as a secondary objective. The fund will seek to achieve its investment objectives to produce total return for shareholders by utilizing a dynamic asset allocation strategy among multiple fixed-income sectors to invest in a portfolio of fixed-income securities and related instruments of any type and any quality worldwide.
I would recommend buying the fund at or below its Net Asset Value. The fund started trading in May 2012.
4. Vornado Realty Trust (VNO) is a fully integrated real estate investment trust (REIT). Vornado is one of the largest owners and managers of commercial real estate in the United States with a portfolio over 100 million square feet, primarily located in the New York and Washington, DC areas. Vornado's core businesses include New York Office and Retail Properties; Washington, DC Office Properties; and, Retail Properties in the northeast states, California and Puerto Rico.
Daniel Tisch purchased 5,000 shares on August 10. Daniel Tisch is a director of the company.
The company reported the second-quarter financial results on August 6 with the following highlights:
|Net income||$0.11 per share|
|FFO||$0.89 per share|
Funds From Operations (FFO) attributable to common shareholders plus assumed conversions for the quarter ended June 30, 2012, was $166.7 million, or $0.89 per diluted share.
The stock has a $74 price target from the Point and Figure chart. The Friday's insider buy was the first one in this stock since June 2010. There has been several insider sells since 2010. The stock has a 3.45% dividend yield currently.
5. Mackinac Financial Corporation (MFNC) is a registered bank holding company formed under the Bank Holding Company Act of 1956 with assets in excess of $490 million. The principal subsidiary of the corporation is mBank. Headquartered in Manistique, Michigan, mBank has 11 branch locations; seven in the Upper Peninsula, three in the Northern Lower Peninsula and one in Oakland County, Michigan. The company's banking services include commercial lending and treasury management products and services geared toward small to mid-sized businesses, as well as a full array of personal and business deposit products and consumer loans.
Paul Tobias purchased 54,952 shares on August 9 and currently holds 137,036 shares of the company. The shares were purchased through the employee benefit plan. Paul Tobias serves as Chairman of the Board and Chief Executive Officer of Mackinac Financial Corporation and Chairman of the Board of mBank. Mr. Tobias was appointed to his present positions with the corporation and the bank on December 16, 2004.
There were six other insiders who purchased shares on August 9 through the employee benefit plan.
The company reported the first-quarter financial results on May 2 with the following highlights:
|Net income||$0.14 per share|
|Shares outstanding||3.4 million|