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

1. Sirius XM Radio (SIRI) is the world's largest radio broadcaster measured by revenue and has nearly 23 million subscribers. SiriusXM creates and broadcasts commercial-free music; premier sports talk and live events; comedy; news; exclusive talk and entertainment; and the most comprehensive Latin music, sports and talk programming in radio. SiriusXM is available in vehicles from every major car company in the U.S., from retailers nationwide, and online at siriusxm.com. SiriusXM programming is also available through the SiriusXM Internet Radio App for Android, Apple, and BlackBerry smartphones and other connected devices. SiriusXM also holds a minority interest in SiriusXM Canada which has more than 2 million subscribers.

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Insider buys

Liberty Media Corporation purchased 89,970,000 shares on August 10 - 14.

Financials

The company reported the second-quarter financial results on August 7 with the following highlights:

Revenue$ million837.5
incomeNet$ pershare0.48
Cash$ million868.3

Outlook

Mel Karmazin, Chief Executive Officer, SiriusXM commented:

"Our increase in adjusted EBITDA guidance to approximately $900 million indicates strong confidence in our ability to continue to execute in the back half of the year. We were also pleased to raise our subscriber guidance for the second time this year just last month."

The company's 2012 subscriber, revenue, adjusted EBITDA and free cash flow guidance are as follows:

  • Net subscriber growth approaching 1.6 million,
  • Revenue approaching $3.4 billion,
  • Adjusted EBITDA of approximately $900 million, and
  • Free cash flow of approximately $700 million.

My analysis

The stock has a $4.75 price target from the Point and Figure chart. The stock is currently trading at a P/E ratio of 4.77. The stock could be a good pick now.

2. The Cheesecake Factory Incorporated (CAKE) created the upscale casual dining segment in 1978 with the introduction of its namesake concept. The company operates 173 full-service, casual dining restaurants throughout the U.S., including 158 restaurants under The Cheesecake Factory mark; 14 restaurants under the Grand Lux Cafe mark; and one restaurant under the RockSugar Pan Asian Kitchen mark. The company also operates two bakery production facilities in Calabasas Hills, CA and Rocky Mount, NC that produce over 70 varieties of quality cheesecakes and other baked products.

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Insider buys

Herbert Simon purchased 25,000 shares on August 13 and currently holds 150,000 shares of the company. Herbert Simon has served as a director of the company since 2011.

Financials

The company reported the second-quarter financial results on July 25 with the following highlights:

Revenue$ million454.7
pershareEarnings$0.52
outstandingShares million55.1

Outlook

W. Douglas Benn, Chief Financial Officer and Executive Vice President, commented during the second-quarter earnings call:

"For the third quarter of 2012, we estimate diluted earnings per share of between $0.47 and $0.49 based on an assumed range of comparable sales between 1.5% and 2.5%. This is consistent with our performance in the first half of this year, as well as our expectations for full year comparable sales. With respect to the full year 2012, we are raising our diluted earnings per share assumption to a range of $1.87 to $1.93. This reflects the flow-through from our better-than-expected performance in the second quarter. Our earnings growth expectation of 14% to 18% this year is in line with our longer-term mid-teens earnings per share growth objective, and is based on assumed comparable sales growth for the year of between 1.5% and 2.5%."

My analysis

The stock has a $49 price target from the Point and Figure chart. The stock is currently trading at a forward P/E of 15.1. I have currently a neutral bias for the stock.

3. Sonus Networks (SONS) helps the world's leading communications service providers and enterprises embrace the next generation of SIP-based solutions including VoIP, video and Unified Communications through secure, reliable and scalable IP networks. With customers around the globe and 15 years of experience transforming networks to IP, Sonus has enabled service providers to capture and retain users and both service providers and enterprises to generate significant ROI. Sonus products include session border controllers, policy/routing servers, subscriber feature servers and media and signaling gateways. Sonus products are supported by a global services team with experience in design, deployment and maintenance of some of the world's largest and most complex IP networks.

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Insider buys

Empire Capital Management purchased 428,163 shares on August 10 and currently holds 34,477,231 shares of the company. The company has 280 million shares outstanding which makes Empire Capital Management a 12.3% owner of the company.

Financials

The company reported the second-quarter financial results on August 7 with the following highlights:

Revenue$ million57.6
lossNet$ pershare0.04
Cash$ million340.8
pershareCash$1.22

Outlook

For the third quarter of 2012, management provides the following outlook on a non-GAAP basis:

  • Total revenue of $51 million to $53 million
  • SBC total revenue, including maintenance and services, of $17 million to $19 million, up 23% to 37% from the third quarter of 2011
  • SBC product revenue of $14 million to $16 million, up 35% to 54% from the third quarter of 2011
  • Gross margins between 58% and 59%
  • Operating expenses of $39 million to $40 million
  • Loss per share of $0.03
  • Basic shares of 280 million
  • Cash and investments of approximately $300 million, assuming the NET acquisition closes in the third quarter


My analysis

The company has a strong cash position of $1.22 per share compared to the current share price of $1.73. I would expect the $1.2 level hold for the stock and would recommend buying the shares around $1.5 level.

4. Zipcar (ZIP) is the world's leading car-sharing network with more than 731,000 members and 11,000 vehicles in urban areas and college campuses throughout the United States, Canada, the United Kingdom, Spain and Austria. Zipcar offers more than 30 makes and models of self-service vehicles by the hour or day to residents and businesses looking for an alternative to the high costs and hassles of owning a car.

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Insider buys

Stephen Case purchased 61,700 shares on August 10 and 265,976 shares on August 7-9. Stephen Case currently controls 7,179,851 shares of the company. The company has 39.8 million shares outstanding which makes Stephen Case a 18.1% owner of the company. Stephen Case also serves as a director of the company.

Financials

The company reported the second-quarter financial results on August 2 with the following highlights:

Revenue$ million70.8
lossNet$ pershare0.01
Cash$ million62.7

Outlook

The company gave the following outlook on August 2:

For the full year 2012, revenue is now expected in the range of $272 million to $278 million. Full year 2012 Adjusted EBITDA is now expected to range from $12 million to $16 million and US GAAP net income is now expected to range from breakeven to $4 million. For the 2012 third quarter, Zipcar expects revenue in the range of $74 million to $77 million. Adjusted EBITDA for the period is expected to range from $2.5 million to $5 million and US GAAP net income is expected to range from a loss of $0.5 million to a profit of $2 million. Zipcar's average share count is expected to be between 39.5 million and 40.5 million for the third quarter and the full year. Common stock equivalents of approximately 1.5 to 2.5 million shares would be included to the extent Zipcar records positive US GAAP net income.

My analysis

The stock is down from a $30 level in 2011 to the current $8 level. There has not been any insider buys in the stock since last week. I am still a little hesitant to call a bottom for the stock.

5. Anadarko Petroleum Corporation's (APC) mission is to deliver a competitive and sustainable rate of return to shareholders by exploring for, acquiring and developing oil and natural gas resources vital to the world's health and welfare. As of year-end 2011, the company had approximately 2.54 billion barrels-equivalent of proved reserves, making it one of the world's largest independent exploration and production companies.

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Insider buys

Richard George purchased 6,000 shares on August 14 and currently holds 12,937 shares of the company. Richard George serves as a director of the company.

Financials

The company reported the second-quarter financial results on July 30 with the following highlights:

Revenue$ billion3.2
lossNet$ pershare0.18
Cash$ billion2.8

Upcoming catalysts

R. A. Walker, Chief Executive Officer and President and Director of Anadarko Petroleum, commented during the second-quarter earnings call:

In the months ahead, we anticipate a number of notable catalysts that we expect to do the following: increase production in the U.S. onshore liquid-rich plays; continue a very active global deepwater exploration and appraisal program; submit a plan of development for the TEN complex offshore Ghana; and achieve first production at the El Merk project towards the end of this year. There's a lot to be excited about, and we're focused on driving value in the years and the months ahead.

My analysis

The stock has a $61 price target from the Point and Figure chart. I would recommend waiting until that target is met before taking a position.

Source: Top 5 Insider Buys Filed On August 14