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 14. I chose the top seven companies with insider buying in dollar terms. Here are the seven 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.
Liberty Media Corporation purchased 11,097,162 shares on September 12, 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 3,203,666,979 shares of Sirius and is a 49.6% 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 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 22.45. Liberty Media Corporation intends to increase its ownership of Sirius to 50% and above. The stock could be a good speculative pick currently.
2. Forest Laboratories (FRX) longstanding global partnerships and track record developing and marketing pharmaceutical products in the United States have yielded its well-established central nervous system and cardiovascular franchises and innovations in anti-infective, respiratory, gastrointestinal, and pain management medicine. The company's pipeline, the most robust in its history, includes product candidates in all stages of development across a wide range of therapeutic areas.
Carl Icahn purchased 375,656 shares on September 12-13, 86,848 shares on August 30 - September 4, 331,406 shares on August 27-29, 1,343,837 shares on August 22-24 and 1,962,011 shares on August 17-21. Carl Icahn currently controls 30,662,005 shares of the company. The company has 265,693,834 shares outstanding which makes Carl Icahn a 11.5% owner of the company.
The company reported the fiscal year first-quarter 2013 (ending June 30) financial results on July 17 with the following highlights:
|Net income||$55.3 million|
From July 17:
The company expects to hear from the U.S. Food and Drug Administration (FDA) in the coming weeks regarding the approval status of aclidinium for the long-term maintenance treatment of COPD and later this summer the company expects to hear on the approval status of linaclotide for the treatment of irritable bowel syndrome with constipation (IBS-C) and chronic constipation (CC). Assuming approval for both products the company will have two new product launches during fiscal 2013.
Ironwood Pharmaceuticals (IRWD) and Forest Laboratories announced on August 30 that LINZESS (linaclotide) was approved by the U.S. Food and Drug Administration [FDA] as a once-daily treatment for adult men and women suffering from irritable bowel syndrome with constipation [IBS-C] or chronic idiopathic constipation [CIC].
Forest Laboratories announced on August 27 that its newly constituted Board of Directors adopted a stockholder rights plan and declared a dividend distribution of one Preferred Share Purchase Right on each outstanding share of Forest Laboratories common stock.
The Board adopted the rights plan in response to the recent rapid accumulation of a significant portion of Forest's outstanding common stock. The rights plan is intended to protect the company and its stockholders from efforts to obtain control of the company that are inconsistent with the best interests of the company and its stockholders. The rights plan also has an exception for an offer for all shares that is accepted by a majority of the company's shares and treats all shareholders equally.
Howard Solomon, Chairman and Chief Executive Officer of Forest, said:
"After concluding a second proxy contest during which he repeatedly - and erroneously - disparaged Forest's business model and growth prospects, Mr. Icahn increased his already significant position in Forest with rapid open market purchases. In light of these recent developments, the Board has adopted a stockholder rights plan that is designed to ensure that all of Forest Laboratories' stockholders receive fair and equal treatment in the event of any proposed takeover of the Company, to guard against abusive tactics to gain control of Forest Laboratories without paying all stockholders a premium for that control, and to enable all Forest Laboratories stockholders to realize the long-term value of their investment in the Company."
The Rights will expire in 12 months unless the rights plan is ratified by the company's stockholders. The Rights will be exercisable only if a person or group acquires 12% (or 20% in the case of a 13G Institutional Investor, as defined in the rights plan) or more of Forest's common stock.
Carl Icahn has been the only insider buying the shares since December 2010. There has been some insider selling by the other insiders. Carl Icahn owns currently 11.5% of the shares. With the rights plan announced on August 27, Carl Icahn can't acquire more than 12% of the company's stock. The stock is trading at a forward P/E of 22.50. I have a neutral bias for the stock currently.
3. 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 103,466 shares on September 13, 53,000 shares on September 12 and 61,079 shares on September 11. All these share were purchased pursuant to a Rule 10b5-1 trading plan. Mallika Srinivasan currently controls 219,684 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 8.17. The stock looks like a good pick here.
4. FXCM Inc. (FXCM) is a global online provider of foreign exchange, or forex, trading and related services to retail and institutional customers worldwide.
- Ornit Niv purchased 50,000 shares on September 13-14. Ornit Niv is the Head of Sales and Customer Service for the Americas and Asia.
- David Sakhai purchased 30,000 shares on September 13. David Sakhai serves as Chief Operating Officer of the company.
- Robert Lande purchased 9,300 shares on September 12. Robert Lande serves as Chief Financial Officer of the company.
The company reported the second-quarter financial results on August 9 with the following highlights:
|Net income [GAAP]||$7.9 million|
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 16,000 shares on September 12-13, 12,200 shares on September 11 and 6,165 shares on August 6. Jerrold Harris currently controls 42,068 shares of the company. Jerrold Harris serves as a director of the company.
The fund has a Net Asset Value [NAV] of $22.77 per share. The stock has a 6.9% 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 $22.5 level. The stock is currently trading below its Net Asset Value which could be a good entry point for the stock.
6. Fidelity D&D Bancorp (FDBC.OB) is the holding company for Fidelity Deposit and Discount Bank. Founded in Dunmore, Pennsylvania, on May 11, 1903, Fidelity has eleven full service branches throughout Lackawanna and Luzerne counties as well as full service Trust and Investment divisions.
- Brian Cali purchased 6,604 shares on September 12 and 1,019 shares on September 10. Brian Cali currently controls 167,560 shares of the company. Brian Cali serves as a director of the company.
- Daniel Santaniello purchased 510 shares on September 14 and currently holds 13,201 shares of the company. Daniel Santaniello serves as a director of the company.
- Kristin O'Donnell purchased 1,147 shares on September 10-12 and currently controls 53,307 shares of the company. Kristin O'Donnell serves as a director of the company.
- Patrick Dempsey purchased 765 shares on September 10 and currently controls 111,768 shares of the company. Patrick Dempsey is the Chairman of the Board.
The company reported the second-quarter financial results on July 27 with the following highlights:
|Net income||$1.3 million|
|Book value||$24.69 per share|
The stock has seen steady insider buying since June 2007. There has only been three insider sell transactions since June 2007. I would recommend buying the stock below the book value of $24.69 per share.
7. Vanguard Natural Resources (VNR) is a publicly traded limited liability company focused on the acquisition, production and development of oil and natural gas properties. The company's assets consist primarily of producing and non-producing oil and natural gas reserves located in the Permian Basin in West Texas and New Mexico, the Big Horn Basin in Wyoming and Montana, the Arkoma Basin in Arkansas and Oklahoma, the Williston Basin in North Dakota and Montana, Mississippi, and South Texas.
Britt Pence purchased 5,000 shares on September 12 and currently holds 39,500 shares of the company. Britt Pence joined the company in May 2007 as Vice President of Engineering and in June 2010 was promoted to Senior Vice President of Operations.
The company reported the second-quarter financial results on August 2 with the following highlights:
|Net income||$103.4 million|
|Book value||$18.63 per share|
The following table sets forth certain estimates being used by Vanguard to model its anticipated results of operations for the fiscal year ending December 31, 2012 and December 31, 2013 and includes the impact from the recently closed Arkoma Basin acquisition.
|Total production (Boe/d)||18,450-19,083||22,567-23,917|
|Adjusted EBITDA||$240-$250 million||$270-$285 million|
The stock has a $17 price target from the Point and Figure chart. Britt Pence's insider buy was the first insider buy transaction this year. There has not been any insider selling this year. The stock is trading at a forward P/E of 14.52 and has a book value of $18.63 per share. I have a neutral bias for the stock currently.