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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 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 11. 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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Insider buys

Liberty Media Corporation purchased 30,902,838 shares on September 7-11, 5,536,346 shares on September 4-5, 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 3,192,569,817 shares of Sirius. Sirius has 6.5 billion shares outstanding, which makes Liberty Media Corporation a 49.1% 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.

Financials

The company reported the second-quarter financial results on August 7 with the following highlights:

Revenue$837.5 million
Net income$0.48 per share
Cash$868.3 million

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.

Outlook

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.

My analysis

The stock has a $4.75 price target from the Point and Figure chart. Liberty Media Corporation has been the only insider buying the shares since at least June 2009. There has been steady insider selling by the other insiders since June 2009. The stock is trading at a forward P/E of 22.73. Liberty Media Corporation intends to increase its ownership of Sirius to 50% and above. The stock could be a good speculative pick currently.

2. Infinity (INFI) is an innovative drug discovery and development company seeking to discover, develop and deliver to patients best-in-class medicines for diseases with significant unmet need. Infinity combines proven scientific expertise with a passion for developing novel small molecule drugs that target emerging disease pathways. Infinity's programs focused on the inhibition of phosphoinositide-3-kinase, heat shock protein 90 and fatty acid amide hydrolase are evidence of its innovative approach to drug discovery and development.

Insider buys

Purdue Pharma purchased 5,416,565 shares on September 7 via a public offering. Infinity has 32,569,697 shares outstanding which makes Purdue Pharma a 16.6% owner of Infinity.

Financials

The company reported the second-quarter financial results on August 7 with the following highlights:

Revenue$21.9 million
Net loss$14.7 million
Cash$104.6 million

Outlook

On August 7 Infinity provided 2012 financial expectations for operating expenses:

  • Operating expenses: Infinity expects operating expenses for 2012 to range from $135 million to $145 million, revised from an earlier expectation of $145 million to $155 million.

The company expects to have a cash runway into 2014 after the August 14 public offering.

Upcoming milestones

Phase 1 trial of IPI-145 in patients with advanced hematologic malignancies:

  • In July, the company expanded its Phase 1, open-label, dose-escalation trial of IPI-145 in patients with advanced hematologic malignancies. This expansion cohort is designed to evaluate the safety, pharmacokinetics and efficacy of IPI-145 administered at 25 mg twice daily [BID] in patients with chronic lymphocytic leukemia, indolent non-Hodgkin's lymphoma or mantle cell lymphoma. There have been confirmed investigator assessments of clinical response at the lowest dose levels, including 15 mg BID and less. To date, IPI-145 has been generally well tolerated and dose escalation remains ongoing to determine the maximum tolerated dose.
  • Additional expansion cohorts are planned once the maximum tolerated dose of IPI-145 is determined. Infinity announced that the malignancies that may be evaluated in these cohort expansions include T-cell lymphomas, diffuse large B-cell lymphoma, acute lymphocytic leukemia and myeloproliferative neoplasms. Infinity expects to present data from this trial at a medical meeting in the second half of 2012.

Phase 2 trial of retaspimycin HCl in NSCLC:

  • In July, Infinity reported that the Phase 2, double-blind, randomized, placebo-controlled trial of retaspimycin hydrochloride [HCl] in non-small cell lung cancer [NSCLC] patients with a history of smoking is enrolling ahead of schedule. Infinity now anticipates completing enrollment in this trial this fall and expects to report data from the trial in the first half of 2013. Retaspimycin HCl is an intravenously administered, potent and selective heat shock protein 90 (Hsp90) inhibitor.

My analysis

The stock has a $25.5 price target from the Point and Figure chart. The stock has seen more insider buying than selling this year. The next milestones are expected later this year and early next year. I believe the stock could reach the price target after positive trial results later this year and early next year. With negative results the stock could drop below $15.

3. China Information Technology (CNIT), through its subsidiaries and other consolidated entities, specializes in geographic information systems [GIS], digital public security technology [DPST], and hospital information systems [HIS], as well as high-end digital display products and solutions in China. Headquartered in Shenzhen, China, the company's integrated solutions include specialized software, hardware, systems integration, and related services to help its customers improve efficiency in information management.

Insider buys

Jiang Lin purchased 1,400,000 shares on September 10 and currently holds 13,992,750 shares of the company. During 2012, Jiang Lin has purchased a total of 3,049,879 shares. The company has 27,007,608 shares outstanding, which makes Mr. Lin a 51.8% owner of the company. Mr. Lin is Chief Executive Officer of the company and Chairman of the Board.

Financials

The company reported the second-quarter financial results on August 7 with the following highlights:

Revenue$13.28 million
Net loss$16.85 million
Cash$7.4 million

Outlook

The company believes the difficult macro conditions will continue to negatively impact its business for the rest of the year and thus expects its non-GAAP (excluding goodwill impairment, amortization of intangible assets, and other asset write-downs) fiscal year 2012 net income to be at a loss. As the fiscal environment improves, and as the company continues to penetrate new markets, such as interactive education, the company expects to regain profitability in 2013.

My analysis

The stock has seen steady insider buying this year by Mr. Lin. There has not been any insider selling this year. The company expects to be profitable again in 2013. The stock is currently trading below its 200 day moving average. I would recommend only a small speculative position in the stock currently.

4. Opko Health (OPK) is a publicly traded healthcare company involved in the discovery, development, and commercialization of pharmaceutical products, vaccines, and diagnostic products.

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Insider buys

Phillip Frost purchased 90,000 shares on September 10 and currently controls 131,555,400 shares of the company. The company has 297,836,707 shares outstanding, which makes Mr. Frost a 44.1% owner of the company. Phillip Frost is the CEO and chairman of the company. Mr. Frost has been a buyer almost every day this year. His net worth was $2.3 billion as of March 2012.

Financials

The company reported the second-quarter financial results on August 9 with the following highlights:

Revenue$10.2 million
Net loss$10.8 million
Cash$55.3 million

Upcoming Milestones

  • The company expects to begin marketing its test for Alzheimer's disease in 2013. The company believes that this test could initially be useful in stratifying patients for ongoing clinical trials of potential Alzheimer's drugs, as well as to confirm the diagnosis in a clinical setting and to track the progression of the disease or effectiveness of a therapeutic in a clinical trial.
  • The company has already obtained a CE Mark for its point-of-care diagnostic test for prostate specific antigen [PSA] using its system in Europe, and the company intends to launch the PSA test in Europe in the second half of 2012.
  • In December 2011, the company commenced a multi-center study in the U.S. for the PSA test, which is designed for 510(k) clearance and potential waiver under The Clinical Laboratory Improvement Amendments of 1988. The company intends to submit its application to the Food and Drug Administration for clearance of the PSA test in 2012 and expects to begin marketing the test in the U.S. in 2013.

News

On August 22 OPKO Health was awarded a contract and selected to participate in a development project directed by NASA to implement the OPKO point-of-care diagnostic platform (Claros-1) with the objective of in-orbit use on the International Space Station.

OPKO will provide a panel of assays, including Vitamin D for bone metabolism, immune health, and inflammation to be used on its Claros-1 portable analyzer. According to Phillip Frost, M.D., OPKO's Chairman and Chief Executive Officer:

"This contract is an opportunity to demonstrate the robustness and ease-of-deployment of the OPKO point-of-care system as well as the wide range of complex and high performance diagnostic tests which can be rapidly implemented for use in any environment."

My Analysis

The stock has a $2.75 price target from the Point and Figure chart. The company has several catalysts pending for 2012 and 2013. I would be watching the $4 level closely to see if it holds or not. The 200 day moving average is currently at $4.73 which could act like resistance for the stock. Phillip Frost has been buying 5-10% of the shares traded each day for months already.

5. EnerNOC (ENOC) unlocks the full value of energy management for its utility and commercial, institutional, and industrial (C&I) customers by reducing real-time demand for electricity, increasing energy efficiency, improving energy supply transparency in competitive markets, and mitigating emissions. The company accomplishes this by delivering world-class energy management applications and services including DemandSMART, comprehensive demand response; EfficiencySMART, continuous energy savings; SupplySMART, energy price and risk management; and CarbonSMART, enterprise carbon management. The company's Network Operations Center [NOC] continuously supports these applications across thousands of C&I customer sites throughout the world. Working with more than 100 utilities and grid operators globally, the company delivers energy, ancillary services, and carbon mitigation resources that provide cost-effective alternatives to investments in traditional power generation, transmission, and distribution.

Insider buys

Arthur Coviello purchased 25,000 shares on September 7 and currently holds 48,435 shares of the company. Arthur Coviello serves as a director of the company.

Financials

The company reported the second-quarter financial results on August 7 with the following highlights:

Revenue$33.3 million
Net loss$29.1 million
Cash$79.4 million

Outlook

  • Third quarter 2012: The company expects third quarter revenue to be in the range of $160 million to $176 million. The company expects third quarter GAAP net income per diluted share to be in the range of $1.60 to $1.90 based on weighted-average diluted shares outstanding of 27.3 million.
  • Full Year 2012: The company expects full year 2012 revenue to be in the range of $260 million to $280 million, compared to its previously published 2012 guidance range of $250 million to $280 million. GAAP net loss for 2012 is expected to be in the range of $1.00 to $1.40 per basic and diluted share, compared to the company's previously published 2012 guidance range of $1.00 to $1.50 per basic and diluted share.
  • Full Year 2013: The company expects full year 2013 revenue to be in the range of $350 million to $400 million, consistent with its previously published 2013 guidance. GAAP net income for 2013 is expected to be in the range of $0.15 to $0.75 per diluted share, compared to the company's previously published 2013 guidance range of a net loss of $0.25 per basic and diluted share to net income of $0.50 per diluted share.

My analysis

There has been three insider buy transactions this year. There has not been any insider selling this year. The stock is trading at a forward P/E of 35.96 and has a book value of $6.89 per share. I would expect the $7 level to act like a support for the stock.

Source: Top 5 Insider Buys Filed On September 11