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 September 5. I chose the top five companies with insider buying in dollar terms. Here are the five stocks:
1. Sears Holdings Corporation (SHLD) is a leading integrated retailer with over 3,900 full-line and specialty retail stores in the United States and Canada and the home of ShopYourWay, a social shopping experience where members have the ability to earn points and receive benefits across a wide variety of physical and digital formats through ShopYourWay.com. Sears Holdings is the leading home appliance retailer, as well as a leader in tools, lawn and garden, fitness equipment and automotive repair and maintenance. Key proprietary brands include Kenmore, Craftsman and DieHard, with a broad apparel offering, including such well-known labels as Lands' End, the Kardashian Kollection, Jaclyn Smith and Joe Boxer, as well as Sofia by Sofia Vergara and The Country Living Home Collection. The company is the nation's largest provider of home services, with more than 15 million service and installation calls made annually and has a long-established commitment to those who serve in the military through initiatives like the Heroes at Home program. It has been named the 2011 Mobile Retailer of the Year, Recipient of the 2012 ENERGY STAR "Corporate Commitment Award" for Product Retailing and Energy Management and one of the Top 20 Best Places to Work for Recent Grads. Sears Holdings Corporation operates through its subsidiaries, including Sears, Roebuck and Co. and Kmart Corporation.
Edward Lampert purchased 2,399,824 shares on September 4. Edward Lampert serves as a director of the company.
The company reported the second-quarter financial results on August 16 with the following highlights:
|Net loss||$132 million|
The stock has a $46 price target from the Point and Figure chart. Edward Lampert has been the only insider buying the shares this year. There has been more insider buying than selling this year. The stock has a book value of $41.85 per share which, I would expect to hold as a support for the stock. I would recommend waiting until the $46 level before buying the stock.
2. Brown-Forman Corporation (BF.A) has enriched the experience of life by responsibly building fine quality beverage alcohol brands, including Jack Daniel's Tennessee Whiskey, Southern Comfort, Finlandia, Jack Daniel's & Cola, Canadian Mist, Korbel, Gentleman Jack, el Jimador, Herradura, Sonoma-Cutrer, Chambord, New Mix, Tuaca, and Woodford Reserve. Brown-Forman's brands are supported by nearly 4,000 employees and sold in approximately 160 countries worldwide.
The company reported the financial results for its first-quarter of fiscal 2013 (ending July 31) on August 29 with the following highlights:
|Net income||$118.1 million|
At this early stage in the fiscal year, the company is confirming its fiscal 2013 earnings outlook of $2.40 to $2.67, adjusted for the three-for-two stock split. First-quarter reported results benefited significantly from buy-ins in advance of price increases. Accordingly, this outlook assumes second-quarter results will likely reflect the impact of the marketplace working through the first quarter buy-ins. This outlook also includes anticipated negative impacts from foreign exchange of $0.05 per share and commodity price increases of $0.03 per share. At this point, for fiscal 2013 the company continues to expect high single-digit growth in underlying sales and operating income.
The stock has a $104 price target from the Point and Figure chart. Dace Stubbs was the first insider to buy the shares this year. The stock has seen steady insider selling by other insiders this year. The stock is trading at a P/E ratio of 24.85 currently. I would recommend buying the stock at dips towards the 200 day moving average.
3. Amyris (AMRS) is an integrated renewable products company focused on providing sustainable alternatives to a broad range of petroleum-sourced products. Amyris uses its industrial synthetic biology platform to convert plant sugars into a variety of hydrocarbon molecules-flexible building blocks that can be used in a wide range of products. Amyris is commercializing these products both as No Compromise renewable ingredients in cosmetics, flavors and fragrances, polymers, lubricants and consumer products, and also as No Compromise renewable diesel and jet fuel. Amyris Brasil, a subsidiary of Amyris, oversees the establishment and expansion of Amyris's production in Brazil.
The company reported the second-quarter financial results on July 31 with the following highlights:
|Net loss||$47.1 million|
The stock has a $8.75 price target from the Point and Figure chart. There has been more insider buying than selling this year. John Melo has been the only insider selling the shares this year. I have a neutral bias for the stock currently.
4. American Pacific Corporation (APFC) is a leading custom manufacturer of fine chemicals and specialty chemicals within its focused markets. The company supplies active pharmaceutical ingredients and advanced intermediates to the pharmaceutical industry. For the aerospace and defense industry, the company provides specialty chemicals used in solid rocket motors for space launch and military missiles. The company produces clean agent chemicals for the fire protection industry, as well as electro-chemical equipment for the water treatment industry. The company's products are designed to meet customer specifications and often must meet certain governmental and regulatory approvals.
Cornwall Capital Management purchased 29,235 shares on August 29 - September 4 and currently holds 952,036 shares of the company. American Pacific Corporation has 7,622,591 shares outstanding, which makes Cornwall Capital Management a 12.5% owner of American Pacific Corporation.
The company reported the financial results for its fiscal 2012 third-quarter (ended June 30, 2012) on August 9 with the following highlights:
|Net income||$4.7 million|
The company's outlook for fiscal 2012 has improved. For fiscal 2012, the company expects consolidated revenues (continuing operations) of at least $175.0 million, and adjusted EBITDA (continuing operations) of at least $36.0 million. The revenue outlook reflects the following factors:
- Fine Chemicals segment revenues are anticipated to increase by at least 15% in fiscal 2012. The anticipated increase is supported primarily by growth in revenues from the company's anti-viral products.
- Specialty Chemicals segment revenues are expected to increase slightly in fiscal 2012 as compared to fiscal 2011. The company's revenue outlook for this segment has improved based on current order backlog and the related timing of shipments.
The company is anticipating its capital expenditures for continuing operations, which do not include environmental remediation spending, for fiscal 2012 to be approximately $11.0 million.
The stock has a $20.75 price target from the Point and Figure chart. Cornwall Capital Management has been the only insider buying the shares this year. There has been some insider selling by the other insiders. The stock is currently trading at a P/E ratio of 9.88. I would be interested in buying the shares around $9-$10 level.
5. Signature (SGGH.PK) is a diversified business and financial services enterprise with principal activities in industrial distribution and special situations financings. Signature has significant capital resources and is actively seeking both acquisitions and growth opportunities for its existing businesses. Signature has federal net operating loss tax carryforwards of approximately $890 million.
- Craig Noell purchased 600,000 shares on August 31 and currently controls 2,342,724 shares of the company. Mr. Noell is CEO and Director of Signature Group Holdings and is also Chairman of the Executive Committee. Mr. Noell co-founded Signature Capital Partners in 2004.
- Thomas Donatelli purchased 1,000,000 shares on August 31 and currently controls 2,593,750 shares of the company. Mr. Donatelli currently serves as Executive Vice President of Signature Group Holdings.
The company reported the second-quarter financial results on August 9 with the following highlights:
|Net loss||$3.9 million|
The stock has a $2.94 price target from the Point and Figure chart. The stock has only seen insider buying since June 2010. The last insider sells were in August 2006. I have a neutral bias for the stock currently.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.