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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 13. I chose the top five companies with insider buying in dollar terms. Here are the five stocks:

1. Peregrine Semiconductor (NASDAQ:PSMI) is a fabless provider of high performance radio frequency integrated circuits, or RFICs. The company's solutions leverage its proprietary UltraCMOS technology, which enables the design, manufacture, and integration of multiple radio frequency, or RF, mixed signal, and digital functions on a single chip. The company believes its products deliver an industry leading combination of performance and monolithic integration. The company's solutions target a broad range of applications in the aerospace and defense, broadband, industrial, mobile wireless device, test and measurement equipment, and wireless infrastructure markets.

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Insider buys

Morgenthaler Partners VI purchased 200,000 shares on August 13 and currently holds 3,751,013 shares of the company. The shares were purchased through the Initial Public Offering at $14 per share. The company has 31,554,301 shares outstanding after the IPO which makes Morgenthaler Partners VI a 12% owner of the company.

Financials

The company has reported the financial results for the six months ending June 30 with the following highlights:

Revenue$80.3 million
Net loss$3.1 million

My analysis

The stock is currently trading at a Price to Sales ratio of 3. I am not planning to take a position in the stock currently.

2. United Airlines (NYSE:UAL) and United Express operate an average of 5,574 flights a day to 377 airports on six continents from its hubs in Chicago, Cleveland, Denver, Guam, Houston, Los Angeles, New York/Newark, San Francisco, Tokyo and Washington, D.C. In 2011, United carried more traffic than any other airline in the world, and operated more than two million flights carrying 142 million passengers. United is upgrading its cabins with more flat-bed seats in first and business class and more extra-legroom economy-class seating than any other airline in North America. United operates nearly 700 mainline aircraft and has orders for more than 270 new aircraft deliveries through 2022, including 50 Boeing 787 Dreamliners, 25 Airbus A350XWBs, and 100 Boeing 737 MAX 9 aircraft. United was rated the world's most admired airline on FORTUNE magazine's 2012 airline industry list of the World's Most Admired Companies. Readers of Global Traveler magazine have voted United's MileagePlus program the best frequent flyer program for eight consecutive years. United is a founding member of Star Alliance, which provides service to 193 countries via 27 member airlines. More than 85,000 United employees reside in every U.S. state and in countries around the world.

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Insider buys

  • Jeffery Smisek purchased 55,600 shares on August 9 and currently holds 339,184 shares of the company. Jeffery Smisek is President and Chief Executive Officer of United Continental Holdings the holding company for both United Airlines and Continental Airlines.

  • Peter McDonald purchased 13,500 shares on August 10 and currently holds 51,731 shares of the company. Peter McDonald is Executive Vice President and Chief Operations Officer for United.

  • Nene Foxhall purchased 13,500 shares on August 9 and currently holds 46,747 shares of the company. Nene Foxhall is Executive Vice President Communications and Government Affairs for United.

  • James Compton purchased 13,500 shares on August 9 and currently holds 66,281 shares of the company. James Compton is Executive Vice President and Chief Revenue Officer for United.

  • Michael Bonds purchased 13,500 shares on August 9 and currently holds 44,619 shares of the company. Michael Bonds is Executive Vice President Human Resources and Labor Relations for United.

  • John Rainey purchased 13,500 shares on August 9 and currently holds 37,232 shares of the company. John Rainey is Executive Vice President and Chief Financial Officer for United.

Financials

The company reported the second-quarter financial results on July 26 with the following highlights:

Revenue$9.9 billion
Earnings per share$0.89
Shares outstanding393 million

On August 8, United reported July 2012 combined operational results for its airline units:

  • UAL's consolidated traffic (revenue passenger miles) in July 2012 decreased 2.8% and consolidated capacity (available seat miles) decreased 2.1% versus July 2011. The company's consolidated load factor in July 2012 decreased 0.6 points compared to July 2011.

  • UAL's July 2012 consolidated passenger revenue per available seat mile (PRASM) is estimated to be approximately flat compared to July 2011.

My analysis

The stock is currently trading at a forward P/E of 3.40. The stock did see some insider selling in March-May time frame at above $20 level. I believe the stock could test the $20-$25 levels again this year.

3. Dole Food Company (NYSE:DOLE) engages in sourcing, growing, processing, marketing, and distributing fresh fruits and vegetables, and food products to wholesale, retail, and institutional customers worldwide. It operates in three segments: Fresh Fruit, Fresh Vegetables, and Packaged Foods.

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Insider buys

David Murdock purchased 112,531 shares on August 9-10, 789,500 shares on August 6-8, 411,600 shares on August 2-3, 617,400 shares on July 30 - August 1 and 278,800 shares on July 24-25. The company has 88,946,386 shares outstanding. Mr. Murdock has beneficial ownership of an aggregate of 53,919,831 shares or 60.6% of the company's stock. Mr. Murdock, 86, joined Dole as Chairman of the Board and Chief Executive Officer in July 1985.

Financials

The company reported the second-quarter financial results on July 19 with the following highlights:

Revenue$1.7 billion
Earnings per share$0.73
Cash$94.7 million

David A. DeLorenzo, Dole's President and CEO on company's strategic review during second quarter earnings announcement:

We are continuing to look at a wide variety of potential alternatives as part of the strategic review of our businesses. As part of this review, we are exploring transactions that may include a full or partial separation of one or more of our businesses through a spin-off or other capital markets transaction, as well as joint venture and sale transactions, all of which are aimed at enhancing shareholder value. This review continues to be a company priority in our efforts to enhance shareholder value.

My analysis

The stock has a $24 price target from the Point and Figure chart. David Murdock has purchased a total of 2,209,831 shares since July 24. David Murdock's net worth was estimated at $2.7 billion as of March 2012.

4. UGI Corporation (NYSE:UGI) is a distributor and marketer of energy products and services. Through subsidiaries, UGI operates natural gas and electric utilities in Pennsylvania, distributes propane both domestically and internationally, manages midstream energy and electric generation assets in Pennsylvania, and engages in energy marketing in the Mid-Atlantic region. UGI, through subsidiaries, is the sole General Partner and owns 26% of AmeriGas Partners (APU), the nation's largest retail propane distributor.

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Insider buys

Frank Hermance purchased 35,000 shares on August 10 and currently holds 65,000 shares of the company. Frank Hermance serves as a director of the company.

Financials

The company reported the third-quarter (ending June 30) financial results on August 7 with the following highlights:

Revenue$571.9 million
Net loss$0.06 per share
Cash$436.5 million

Outlook

Lon Greenberg, chairman and chief executive officer of UGI, said:

We continue to expect to report diluted earnings per share of between $1.65 and $1.75 for the full fiscal year ending September 30, 2012. This guidance includes an estimate of the dilutive impact associated with the acquisition and transition costs that we expect to incur at AmeriGas and in our International Propane business of approximately $0.12 per share as well as the impact of the loss on extinguishment of debt at AmeriGas of $0.02 per share. We look forward to providing fiscal 2013 guidance and an update on our strategic initiatives at UGI's Analyst Day on October 17th.

My analysis

The stock has a $40 price target from the Point and Figure chart. The stock has seen both insider buys and sell during the last two years. I have currently a neutral bias for the stock.

5. The E*TRADE Financial (NASDAQ:ETFC) family of companies provides financial services including online brokerage and related banking products and services to retail investors. Specific business segments include Trading and Investing and Balance Sheet Management. Securities products and services are offered by E*TRADE Securities LLC (Member FINRA/SIPC). Bank products and services are offered by E*TRADE Bank, a Federal savings bank, Member FDIC, or its subsidiaries and affiliates.

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Insider buys

  • Frank Petrilli purchased 119,250 shares of the company on August 13 and currently holds 137,887 shares of the company. Frank Petrilli was appointed the company's interim Chief Executive Officer in August 2012. He has been a director and Chairman of the Board since January 2012.

  • Rodger Lawson purchased 7,528 shares of the company on August 13 and currently holds 15,361 shares of the company. Rodger Lawson has been a director of the company since February 2012, and was appointed Lead Independent Director in August 2012.

Financials

The company reported the second-quarter financial results on July 19 with the following highlights:

Revenue$354.5 million
Earnings per share$0.14
Cash$1.4 billion

My analysis

The stock has a $3 price target from the Point and Figure chart. I am not very confident that the price target will be hit due to the large cash position and book value that the company has.

Source: Top 5 Insider Buys Filed On August 13