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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 on whether or not to purchase a security. Insider buying in and by 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 15. I chose the top five companies with insider buying in dollar terms. Here are the five stocks:

1. 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 847,228 shares on August 13-15, 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 54,767,059 shares or 61.6% 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, commented on the company's strategic review during its 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 3,057,059 shares since July 24. David Murdock's net worth was estimated at $2.7 billion as of March 2012.

2. Air Transport Services Group (NASDAQ: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.

Insider buys

Willem Mesdag purchased 637,000 shares on August 13-15, 762,695 shares on August 8 and currently controls 10,952,425 shares of the company. The company has 64.4 million shares outstanding, which makes Willem Mesdag a 17% owner of the company.

Financials

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

Revenue$153.6 million
Earnings per share$0.17
Cash$47.5 million

Outlook

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, commented:

"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."

My analysis

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 6.19 and has a book value of $4.53 per share. I would be looking to buy the stock at around the $4 level.

3. Home Loan Servicing Solutions (NASDAQ:HLSS) is an internally-managed owner of non-agency mortgage servicing assets with historically stable valuations and cash flows. HLSS' assets are predominately mortgage servicing advances that, along with the related servicing rights, are over-collateralized 30 times by residential real estate. HLSS' objective is to generate stable, recurring fee-based earnings and dividends throughout the economic cycle.

Insider buys

John P. Van Vlack purchased 30,000 shares on August 13 and currently holds 85,000 shares of the company. Mr. Van Vlack has served as a director since October 2011 and was appointed President in March 2012.

Financials

The company reported the second-quarter financial results on July 12 with the following highlights:

Revenue$11.4 million
Net income$0.33 per share
Cash$36.5 million
Monthly dividend$0.10 per share

Outlook

HLSS expects Q3 results to be consistent with Q2:

  • Q3 12 EPS guidance of $0.32-$0.33 per share

My analysis

The stock has a 7.76% dividend yield and a book value of $12.83 per share. The stock has seen steady insider buying since the company's IPO in March 2012. The stock could be a good buy at around the $14 level.

4. Solar Senior Capital (NASDAQ:SUNS) invests primarily in leveraged, middle-market companies in the form of senior secured loans, including first lien, unitranche and second lien debt instruments. Solar Senior Capital's investment objective is to maximize current income consistent with the preservation of capital. Solar Senior Capital does this through applying private equity style investing to credit. Solar Senior Capital maintains this investment philosophy through a disciplined approach to rigorous monitoring.

Solar Senior Capital is a closed-end, externally managed investment company that has elected to be treated as business development company under the investment Company Act of 1940 and intends to be taxed as a regulated investment company under Subchapter M of the Internal Revenue Code.

Insider buys

Michael Gross purchased 23,481 shares on August 13-15, 26,250 shares on August 8-10 and 16,574 shares on August 3-7. Michael Gross currently controls 676,601 shares of the company. Michael Gross has been the chairman of the board of directors, chief executive officer and president of Solar Senior Capital since December 2010.

Financials

The company reported the second-quarter financial results on July 31 with the following highlights:

Earnings per share$0.38
Net Asset Value$18.54 per share
Shares outstanding9.5 million
Monthly dividend$0.115 per share

Michael Gross, Chairman and CEO of Solar Senior Capital, commented:

"Our second quarter results reflect continued success in leveraging our origination platform to source attractive middle market senior secured loans and to further diversify our portfolio across a broader number of positions and industry groups. The portfolio is 100% performing and the weighted average yield is 8.0% at current fair value. Continued growth in our net investment income allowed us to increase the monthly dividend since quarter end by 15% to 11.5 cents per share. NII per share exceeded dividends paid in the current quarter and year to date. We believe that we are on course to further increase our monthly dividend as we continue to grow the portfolio to our target leverage level."

My analysis

The stock has a $26 price target from the Point and Figure chart. I believe the target price is achievable during the next 12-24 months. The stock has a 7.93% dividend yield and a forward P/E of 11.68.

5. Universal Stainless (NASDAQ:USAP) manufactures and markets semi-finished and finished specialty steel products, including stainless steel, tool steel and certain other alloyed steels, in a wide variety of grades, widths and gauges in response to customer specifications.

Insider buys

Pennant Capital Management purchased 10,123 shares on August 13 and 17,543 shares on July 30-August 1. Pennant Capital Management currently controls 1,052,668 shares of the company. The company has 7.5 million shares outstanding - which makes Pennant Capital Management a 13.3% owner of the company. Pennant Capital Management has purchased 366,896 shares since April 2012.

Financials

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

Revenue$67.9 million
Net income$0.62 per share
Cash$0.18 million

Outlook

Chairman, President and CEO Dennis Oates commented on July 19:

"Soft demand due to channel inventory adjustments is expected to continue through the normal summer slowdown. However, the fundamental drivers of our end markets remain in place and our long-term growth strategy and prospects remain intact."

My analysis

The stock has a $18 price target from the Point and Figure chart. The stock is currently trading at a forward P/E of 8.09 and has a book value of $28.11 per share. I would expect the stock to find support at the $28 level.

Source: Top 5 Insider Buys Filed On August 15