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 12. I chose the top five companies with insider buying in dollar terms. Here are the five stocks:
1. NuStar Energy L.P. (NS) is a publicly traded, limited partnership based in San Antonio, with 8,433 miles of pipeline; 84 terminal and storage facilities that store and distribute crude oil, refined products and specialty liquids; and two asphalt refineries and a fuels refinery with a combined throughput capacity of 118,500 barrels per day. The partnership's combined system has approximately 96 million barrels of storage capacity. One of the largest asphalt refiners and marketers in the U.S. and the second largest independent liquids terminal operator in the nation, NuStar has operations in the United States, Canada, Mexico, the Netherlands, including St. Eustatius in the Caribbean, the United Kingdom and Turkey.
- William Greehey purchased 490,000 shares on September 10 via a public offering and currently holds 2,086,687 shares of the company. William Greehey serves as a director of the company.
- Jesse Bates purchased 2,000 shares on September 10 and currently controls 11,160 shares of the company. Jesse Bates serves as a director of the company.
The company reported the second-quarter financial results on July 27 with the following highlights:
|Net loss||$246.7 million|
In the last half of 2012, the company expects to benefit from the July 1, 2012 FERC tariff adjustment, the completion of two new pipeline projects in the Eagle Ford Shale region and the completion of a one million barrel expansion project at the St. Eustatius terminal facility. These projects should contribute to higher EBITDA in the last half of 2012 when compared to the last half of 2011.
Curt Anastasio, Chief Executive Officer and President of NuStar Energy and NuStar GP Holdings, commented on July 27:
"We just completed another pipeline project in the Eagle Ford Shale region the first week of July. This was the third pipeline project we have completed in the Eagle Ford in the past year. We expect to complete another project in the region by the end of the third quarter and expect to announce more Eagle Ford projects before the end of the year."
In regard to the full-year outlook for NuStar Energy's business segments Anastasio commented,
"We expect EBITDA in both our storage and transportation segments to be higher than last year. Storage segment EBITDA is expected to be $25 to $35 million higher than 2011 while EBITDA in our transportation segment should be $10 to $20 million higher than last year."
"Lower earnings in our asphalt operations as well as our fuels marketing operations should cause EBITDA in our asphalt and fuels marketing segment to be significantly lower than last year."
The stock has a $37 price target from the Point and Figure chart. There has been five insider buy transactions and one insider sell transaction this year. The stock is trading at a forward P/E of 17.36 and has a book value of $34.03 per share. I would expect the $34 level to act like a support for the stock.
2. AGCO Corporation (AGCO), is a global leader focused on the design, manufacture and distribution of agricultural machinery. AGCO supports more productive farming through a full line of tractors, combines, hay tools, sprayers, forage equipment, tillage, implements, grain storage and protein production systems, as well as related replacement parts. AGCO products are sold through four core machinery brands, Challenger, Fendt, Massey Ferguson and Valtra, and are distributed globally through 3,100 independent dealers and distributors in more than 140 countries worldwide. Retail financing is available through AGCO Finance for qualified purchasers. Founded in 1990, AGCO is headquartered in Duluth, Georgia, USA. In 2011, AGCO had net sales of $8.8 billion.
Mallika Srinivasan purchased 53,000 shares on September 12 and 61,079 shares on September 11 via a Rule 10b5-1 trading plan. Mallika Srinivasan currently controls 116,218 shares of the company. Mallika Srinivasan serves as a director of the company.
The company reported the second-quarter financial results on July 26 with the following highlights:
|Net income||$204.9 million|
AGCO is increasing its earnings outlook and targeting adjusted earnings per share in a range from $5.50 to $5.75 for the full year of 2012. The new guidance reflects the company's improved operating performance which is partially offset by the negative impact of currency translation. Net sales are expected to range from $10.1 billion to $10.3 billion for the full year. Gross margin improvement is expected to be partially offset by increased engineering and market expansion expenditures.
The stock has a $61 price target from the Point and Figure chart. The stock has seen only insider buying (no selling) since May 2012. The latest insider sell transaction was in February 2012. The stock is trading at a forward P/E of 7.76. The stock looks like a good pick here.
3. Providence Service Corporation (PRSC) provides home and community based social services and non-emergency transportation services management to government sponsored clients under programs such as welfare, juvenile justice, Medicaid and corrections. Providence is different from many of its competitors in that it provides its social services primarily in the client's own home or in community based settings versus treatment facilities or hospitals and provides its NET management services through local transportation providers rather than owning its own fleet of vehicles. The company provides a range of services through its direct entities to approximately 53,000 clients through 629 active contracts at June 30, 2012, with an approximate 13.6 million individuals eligible to receive the company's non-emergency transportation services. Combined, the company has an approximately $1 billion book of business including managed entities.
Coliseum Capital Management purchased 146,026 shares on September 10-12, 67,743 shares on August 23-27, 12,099 shares on August 17 and 246,242 shares on August 14-16. Coliseum Capital Management currently holds 2,100,556 shares of the company. The company has 14.8 million shares outstanding, which makes Coliseum Capital Management a 14.2% owner of the company.
The company reported the second-quarter financial results on August 8, with the following highlights:
|Earnings per share||$0.11|
The company has elected to withdraw previously issued earnings guidance for 2012, citing a number of unknowns, including continued and unpredictable start-up costs related to LogistiCare's multiple contract wins, new contract opportunities for the NET segment, new bidding activity in Canada and recent social services wins in a Southwest and Midwest state, along with managed care transitions in a number of states.
The stock has met its bearish $10 price target from the Point and Figure chart. The stock is trading at a forward P/E of 12.67 and has a book value of $8.32 per share. There has been more insider buying than selling in the stock this year. I would be interested in buying the stock around $10 level.
4. Hot Topic (HOTT) is a mall and web based specialty retailer operating the Hot Topic and Torrid concepts. Hot Topic offers music/pop culture-licensed and music/pop culture-influenced apparel, accessories, music and gift items for young men and women. Torrid offers on-trend fashion apparel, lingerie and accessories inspired by and designed to fit the young, voluptuous woman who wears a size 12 and up.
Steven Becker purchased 51,553 shares on September 12 and currently controls 3,572,073 shares of the company. Steven Becker serves as a director of the company.
The company reported the second-quarter financial results on August 15 with the following highligths:
|Net loss||$0.8 million|
James J. McGinty, Chief Financial Officer, Principal Accounting Officer and Secretary, commented during the earnings conference call on August 15:
We expect to see continuing improvement in our operating results compared to last year. This improvement is reflected in our previously announced Q3 earnings guidance in the range of $0.08 to $0.10 per share, compared to last year's $0.07 per share. Now a few more details on the third quarter.
For the third quarter of fiscal 2012, we expect sales to be in the range of $181 million to $185 million based on quarterly comp sales increase in the low single-digit percentage range.
Gross margin is anticipated to improve substantially over last year. SG&A expenses are anticipated to deleverage as they include investments in store preopening costs, Torrid brand marketing, as well as an increase in performance based bonus accrual. We are expecting inventory at the end of the third quarter to be up in the low single-digit percentage range on a per-square-foot basis, which compares to last year's flat per square foot.
We expect depreciation and amortization to be approximately $9 million for the quarter. For the third quarter, we expect to open approximately 18 new Torrid stores. We also expect to remodel approximately 16 Hot Topic stores and 1 Torrid store, as well as relocate 2 Torrid stores to strip center locations from malls. We also expect to close approximately 3 Torrid stores in the quarter.Our guidance assumes approximately 43 million shares outstanding for the third quarter. We expect our fiscal 2012 capital expenditures for store projects to be approximately $25 million, and approximately $12 million for new IT systems. We may make additional capital expenditures in fiscal 2012 for other strategic and operational purposes. Depreciation and amortization is expected to be approximately $35 million for the full year of 2012.
The stock has a $14 price target from the Point and Figure chart. There has been more insider buying than selling this year. The stock is trading at a forward P/E of 17.47. The stock is currently resting at its 200 day moving average which could be a good entry point for the stock.
5. Blackrock Build America Bond Trust (BBN) seeks high current income with capital appreciation through investments in a portfolio of taxable municipal securities known as Build America Bonds.
Jerrold Harris purchased 12,200 shares on September 11 and 6,165 shares on August 6. Jerrold Harris currently controls 26,068 shares of the company. Jerrold Harris serves as a director of the company.
The fund has a Net Asset Value [NAV] of $23.01 per share. The stock has a 6.8% dividend yield.
The stock has seen steady insider buying since October 2010. There has not been any insider selling since September 2010. The stock has had a very impressive run from $15 in 2011 to the current $23 level. I would be looking to be a buyer below the Net Asset Value per share.