Top 5 Insider Buys Filed On August 23

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 |  Includes: CAR, DOLE, HEES, HLSS, TPX
by: Markus Aarnio

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 to purchase a security. Insider buying in and by itself will not make a stock move 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 23. 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 907,285 shares on August 22, 1,000,000 shares on August 16, 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 56,674,244 shares or 63.7% 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
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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. The company has a forward P/E of 9.02. David Murdock has purchased a total of 4,964,344 shares since July 24. David Murdock's net worth was estimated at $2.7 billion as of March 2012.

2. Sealy (ZZ) owns one of the largest bedding brands in the world, with sales of $1.2 billion in fiscal 2011. The company manufactures and markets a broad range of mattresses and foundations under the Sealy, Sealy Posturepedic, Sealy Embody, Optimum by Sealy Posturepedic, Stearns & Foster, and Bassett brands. Sealy operates 25 plants in North America, and has the largest market share and highest consumer awareness of any bedding brand on the continent. In the United States, Sealy sells its products to approximately 3,000 customers with more than 7,000 retail outlets. Sealy is also a leading supplier to the hospitality industry.

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Insider buys

H Partners Management purchased 1,800,000 shares on August 21 and currently holds 17,280,935 shares of the company. H Partners Management is a 16.6% owner of the company.

Financials

The company reported the fiscal second-quarter 2012 results on June 26 with the following highlights:

Revenue $312.0 million
Net income $1.7 million
Cash $81.2 million
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My analysis

The stock is currently trading at a forward P/E of 14.36. The stock has seen more insider buying than selling this year. I have a neutral bias for the stock currently.

3. 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 361,989 shares on August 21-23, 55,024 shares on August 16-20, 61,700 shares on August 10 and 265,976 shares on August 7-9. Stephen Case currently controls 7,596,864 shares of the company. The company has 39.8 million shares outstanding, which makes Stephen Case a 19.1% 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 $70.8 million
Net loss $0.01 per share
Cash $62.7 million
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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 third quarter of 2012, 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. Stephen Case has been the only insider buyer in the stock since April 2011. The last insider sells were at $18 level back in April 2011. The company has a book value of $5.57 per share. I would expect that level to hold for the stock.

4. 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.

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Insider buys

William Erbey purchased 19,906 shares on August 23 and 14,976 shares on August 22. William Erbey currently holds 249,024 shares of the company. William Erbey serves as a director of the company.

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
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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.

5. H&E Equipment Services (NASDAQ:HEES) is one of the largest integrated equipment services companies in the United States with 65 full-service facilities throughout the West Coast, Intermountain, Southwest, Gulf Coast, Mid-Atlantic and Southeast regions of the United States. The company is focused on heavy construction and industrial equipment and rents, sells and provides parts and service support for four core categories of specialized equipment: (1) hi-lift or aerial platform equipment; (2) cranes; (3) earthmoving equipment; and (4) industrial lift trucks. By providing equipment rental, sales, and on-site parts, repair and maintenance functions under one roof, the company is a one-stop provider for its customers' varied equipment needs. This full-service approach provides the company with multiple points of customer contact, enabling it to maintain a high quality rental fleet, as well as an effective distribution channel for fleet disposal and provides cross-selling opportunities among its new and used equipment sales, rental, parts sales and service operations.

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Insider buys

Paul Arnold purchased 10,000 shares on August 22 and currently holds 24,245 shares of the company. Paul Arnold serves as a director of the company.

Financials

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

Revenue $209.9 million
Net income $10.5 million
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Outlook

John Engquist, H&E Equipment Services' president and chief executive officer, commented:

"Our second-quarter performance was again solid, and we are especially pleased with our bottom line improvement. While the overall economic environment is hard to predict, the trends in the markets we serve remain positive and the momentum in our business is continuing. We are opening two new locations in Texas to expand our presence and we continue to evaluate expansion opportunities in other markets as well."

News

H&E Equipment Services announced on August 20 that its Board of Directors declared a one-time special cash dividend of $7.00 per share, payable on September 19, 2012, to stockholders of record at the close of business on September 5, 2012. The aggregate amount of the payment to be made in connection with the dividend will be approximately $246 million. The dividend will be funded by the proceeds of the company's offering of $530 million aggregate principal amount of 7% senior notes due 2022, which closed on August 20, 2012.

My analysis

The stock has a $31.5 price target from the Point and Figure chart. The stock is currently trading at a forward P/E of 13.98. The stock has not seen any insider buying in 2012 before this week. I believe the recent rally in the stock was mainly due to the $7 cash dividend announced on August 20.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in DOLE over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.