Top Insider Buys From The Past 10 Days

|
Includes: AXS, BNCN, CHH, CYBX, FDML, GMCR, MCGC, PLCM, PRSC, XRM
by: Plan B Economics

When insiders buy shares of their own company I take notice. Sure, there are times when a newly-elected director is forced to buy shares but I still view increases in insider purchases as a reason to do further research.

Based on data provided by Finviz, the following 10 purchases were the largest for the past 10 days (ending August 30, 2012). The first table shows the company stock bought, who bought it, their relationship with the company and when they purchased the stock. The second table shows how many shares they acquired, the value and their total holdings.

Note: I have not looked into the reasons behind the purchases. I am simply using the purchase as a flag to look further into the company's financial profile.

Table 1:

Ticker Company Owner Relationship Date
(NASDAQ:BNCN) BNC Bancorp Aquiline BNC Holdings LLC Director Aug-24
(NASDAQ:FDML) Federal-Mogul Corp. ICAHN CARL C Non-executive Board Chairman Aug-30
(NYSE:AXS) Axis Capital Holdings Limited NICHOLS JOHN DRAKE CEO, AXIS Re Aug-30
(NASDAQ:GMCR) Green Mountain Coffee Roasters Inc. DEL VECCHIO JULES A Director Aug-30
(NYSE:XRM) Xerium Technologies Inc. Wilson James Forbes Director Aug-29
(NASDAQ:PRSC) Providence Service Corp. Coliseum Capital Management, L Director Aug-27
Providence Service Corp. Coliseum Capital Management, L Director Aug-23
(NASDAQ:MCGC) MCG Capital Corporation NEU RICHARD W Chief Executive Officer Aug-28
(NASDAQ:CYBX) Cyberonics Inc. Olin Bryan D VP, Quality Aug-30
(NYSE:CHH) Choice Hotels International Inc. ALEXANDER STILES BARBARA Director Aug-27
(NASDAQ:PLCM) Polycom, Inc. MERCER D SCOTT Director Aug-23
Click to enlarge

Table 2:

Ticker Owner #Shares Value ($) #Shares Total
BNCN Aquiline BNC Holdings LLC 12,790 11,807,344 12,790
FDML ICAHN CARL C 239,149 2,250,392 76,697,804
AXS NICHOLS JOHN DRAKE 30,000 1,008,141 80,000
GMCR DEL VECCHIO JULES A 20,000 481,267 260,719
XRM Wilson James Forbes 100,300 426,275 2,047,282
PRSC Coliseum Capital Management, L 35,413 401,938 1,954,530
PRSC Coliseum Capital Management, L 29,530 338,709 1,916,317
MCGC NEU RICHARD W 72,577 329,478 242,259
CYBX Olin Bryan D 18,750 276,000 82,636
CHH ALEXANDER STILES BARBARA 8,000 256,000 10,924
PLCM MERCER D SCOTT 25,000 237,750 25,000
Click to enlarge

If these people are interested, so am I. So let's take a deeper look into the companies being acquired. (Note: this is not a solicitation to buy these stocks. Always do your own due diligence and speak with a financial advisor before investing.)

Table 3 below shows the sectors, size and buy value as a percent of market cap for the shares being acquired. As it relates to market cap, it appears like the BNCN purchase was the most substantial. This, however, was somewhat of an unusual transaction because Aquiline purchased the shares directly from the US Treasury as part of a TARP auction at a price well above the listed NASDAQ price.

Table 3:

Ticker Industry Market Cap ($M) Buy Value ($M)
BNCN Regional - Mid-Atlantic Banks 116.43 11.81 10.14%
FDML Auto Parts 925.7 2.25 0.24%
AXS Property & Casualty Insurance 4339.84 1.01 0.02%
GMCR Processed & Packaged Goods 3780.93 0.48 0.01%
XRM Paper & Paper Products 67.56 0.43 0.63%
PRSC Specialized Health Services 149.36 0.74 0.50%
MCGC Asset Management 343.68 0.33 0.10%
CYBX Medical Appliances & Equipment 1377.07 0.28 0.02%
CHH Lodging 1826 0.26 0.01%
PLCM Processing Systems & Products 1842.67 0.24 0.01%
Click to enlarge

Table 4 looks at valuations. Based on forward earnings projections, all except for CYBX and CHH have sub-15 P/E ratios. On a price-to-book basis, FDML, AXS and MCGC look interesting, as they are all trading below book value. Moreover, FDML is trading close to cash.

Table 4:

Ticker P/E Forward P/E P/S P/B P/Cash
BNCN 15.2 10.13 1.09 1.33 5.04
FDML 5.2 0.14 0.99 1.29
AXS 7.42 9.04 1.13 0.73 5.78
GMCR 11.2 9.72 1.04 1.71 27.2
XRM 110.75 4.92 0.12 2.01
PRSC 12.68 11.08 0.15 1.37 2.98
MCGC 10.11 4.54 0.88 2.18
CYBX 39.01 27.28 6.3 7.5 14.25
CHH 15.68 16.24 2.76 3.72
PLCM 21.27 14.27 1.24 1.3 3.22
Click to enlarge

Not many of these stocks pay dividends, as indicated in Table 5 below. Of those that do, all except for MCGC (which has negative EPS) has a reasonably low payout ratio. This suggests the dividends may be sustainable.

Table 5:

Ticker Dividend Yield Payout Ratio
BNCN 2.63% 31.40%
FDML
AXS 2.82% 21.00%
GMCR 0.00%
XRM 0.00%
PRSC 0.00%
MCGC 12.04% negative
CYBX 0.00%
CHH 2.35% 36.44%
PLCM 0.00%
Click to enlarge

On a historical basis, AXS, GMCR and CYBX have provided a decent ROA, ROE and operating margin (Table 6 below). Note that FDML has been quite negative in the past, but (as indicated above) the street is forecasting a return to profitability. Perhaps this is what Carl Icahn (the buyer) is betting on?

Table 6:

Ticker Return on Assets Return on Equity Operating Margin
BNCN 0.34% 4.99% 6.35%
FDML -3.05% -19.07% -3.74%
AXS 3.44% 11.61% 17.03%
GMCR 11.18% 17.17% 14.67%
XRM 0.09% 7.04% 8.10%
PRSC 3.06% 11.96% 2.62%
MCGC -8.77% -17.27% 30.23%
CYBX 17.04% 20.10% 27.89%
CHH 18.31% 27.79%
PLCM 4.89% 6.49% 6.28%
Click to enlarge

Finally, the two graphs below illustrates the performance of each stock over the past year. The graph shows a wide range of returns, with some stocks (e.g. GMCR) taking a huge hit.

Opportunity knocks for some.

BNCN Chart

BNCN data by YCharts

PRSC Chart

PRSC data by YCharts

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within 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.

Additional disclosure: Data source: Finviz. This is not advice. While the author makes every effort to provide high quality information, the information is not guaranteed to be accurate and should not be relied on. Investing involves risk and you could lose all your money. Consult a professional advisor before making any investing decisions.