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 of 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 31. 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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Liberty Media Corporation purchased 24,871,581 shares on August 29-31, 40,460,803 shares on August 24-28, 4,348,369 shares on August 15-16 and 89,970,000 shares on August 10-14. Liberty Media Corporation currently holds 3,156,130,633 shares of Sirius. Sirius has 6.5 billion shares outstanding, which makes Liberty Media Corporation a 48.6% owner of Sirius. Liberty Media Corporation intends to acquire beneficial ownership of additional shares of common stock that, together with its current beneficial ownership, would represent more than 50% of the outstanding shares of common stock of Sirius.
The company reported the second-quarter financial results on August 7 with the following highlights:
|Net income||$0.48 per share|
Included in the second-quarter 2012 net income was an income tax benefit of approximately $3.0 billion related to a reversal of substantially all of the company's deferred income tax valuation allowance.
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.
The stock has a $4.75 price target from the Point and Figure chart. Liberty Media Corporation intends to increase its ownership of Sirius to 50%. The stock could be a good speculative pick currently.
2. Federal-Mogul Corporation (FDML) designs, engineers, manufactures and distributes technologies to improve fuel economy, reduce emissions and enhance vehicle safety. The company serves the world's foremost original equipment manufacturers of automotive, commercial, aerospace, marine, rail and off-road vehicles; and industrial, agricultural and power-generation equipment. The company also develops and distributes to the aftermarket an extensive product portfolio with more than 20 of the world's most recognized brands, including ANCO wiper blades; Champion spark plugs, wipers and filters; Fel-Pro, Goetze, Glyco and Payen engine products; MOOG chassis parts; and Ferodo and Wagner brake products. Federal-Mogul was founded in Detroit in 1899. The company employs 45,000 people in 34 countries, and its worldwide headquarters is in Southfield, Michigan, United States.
Carl Icahn purchased 239,149 shares on August 30 and 41,500 shares on August 2. Carl Icahn currently controls 76,697,804 shares of the company. The company has 98.9 million shares outstanding, which makes Carl Icahn a 77.6% owner of the company. Mr. Icahn serves as a non-executive Chairman of the Board of the company.
The company reported the second-quarter financial results on July 26 with the following highlights:
|Net loss||$0.6 per share|
|Cash per share||$7.24|
The stock is down from a high of $27 in 2011 to the current $9 level. Carl Icahn has been the only insider buying the shares since August 2011. The last insider sell transaction is from August 2009. The company has a book value of $9.43 per share and cash $7.24 per share. The stock is currently trading at a forward P/E of 5.20. I am not expecting the stock to dip below the cash per share value of $7.24.
3. Xerium Technologies (XRM) is a leading global manufacturer and supplier of two types of consumable products used primarily in the production of paper-clothing and roll covers. The company, which operates around the world under a variety of brand names, utilizes a broad portfolio of patented and proprietary technologies to provide customers with tailored solutions and products integral to production, all designed to optimize performance and reduce operational costs. With 31 manufacturing facilities in 14 countries around the world, Xerium has approximately 3,400 employees.
Carl Marks Management Company purchased 117,470 shares on August 29-31 and currently holds 2,064,452 shares of the company. The company has 15,245,620 shares outstanding which makes Carl Marks Management Company a 13.8% owner of the company.
The company reported the second-quarter financial results on August 6 with the following highlights:
|Net income||$2.2 million|
The stock has a $7 price target from the Point and Figure chart. The stock has seen steady insider buying since June 2011. There has only been one insider sell transaction since March 2011. The stock is currently trading at a forward P/E of 4.92. The stock could be a good pick from the current level.
4. As a leader in specialty coffee and coffee makers, Green Mountain Coffee Roasters (GMCR), is recognized for its award-winning coffees, innovative Keurig Single Cup brewing technology, and socially responsible business practices. GMCR supports local and global communities by offsetting 100% of its direct greenhouse gas emissions, investing in sustainably-grown coffee, and donating a portion of its pre-tax profits to social and environmental projects.
- Jules Del Vecchio purchased 20,000 shares on August 30 and currently holds 260,719 shares of the company. Jules Del Vecchio serves as a director of the company.
- David Moran purchased 1,000 shares on August 30 and currently holds 3,680 shares of the company. David Moran serves as a director of the company.
The company reported the third-quarter fiscal year 2012 results for the 13 weeks ended June 23, 2012, on August 1 with the following highlights:
|Net income (GAAP)||$73.3 million|
For the fourth quarter of fiscal year 2012, the company anticipates:
- Total net sales in the range of $889.9 million to $925.5 million, or net growth of 25% to 30%, from $711.9 million in the fourth quarter of fiscal year 2011.
- Fourth quarter 2012 non-GAAP earnings per diluted share in a range of $0.45 to $0.50 per diluted share.
The stock has a $37 price target from the Point and Figure chart. The stock has seen six insider buy transactions in August 2012. The stock did see some heavy insider selling in February to May 2012 time frame. The stock is trading at a forward P/E ratio of 9.72. The stock could be a good pick from the current level with take profit at $37.
5. Mattersight (MATR) is a leader in enterprise analytics focused on customer and employee interactions and behaviors. Mattersight's Behavioral Analytics service captures and analyzes customer and employee interactions, employee desktop data, and other contextual information to improve operational performance and predict future customer and employee outcomes. Mattersight's analytics are based on millions of proprietary algorithms and the application of unique behavioral models. The company's SaaS+ delivery model combines analytics in the cloud with deep customer partnerships to drive significant business value. Mattersight's applications are used by leading companies in Healthcare, Insurance, Financial Services, Telecommunications, Cable, Utilities and Government.
Sutter Hill Ventures purchased 18,640 shares on August 30 and currently holds 2,032,081 shares of the company. The company has 16,892,297 shares outstanding which makes Sutter Hill Ventures a 11.8% owner of the company.
The company reported the second-quarter financial results on August 8 with the following highlights:
|Net loss||$3.7 million|
Mattersight currently expects its total services revenues will be between $8.0 million and $8.3 million. Mattersight is currently 100% sold to $8.3 million.