I screened with Open Insider for insider buy transactions filed on October 3. From this list, I chose the top 5 stocks with insider buying in dollar terms. Here is a look at these 5 stocks:
1. Tempur-Pedic International (TPX) manufactures and distributes mattresses and pillows made from its proprietary Tempur pressure-relieving material. It is the worldwide leader in premium and specialty sleep. The company is focused on developing, manufacturing and marketing advanced sleep surfaces that help improve the quality of life for people around the world. The company's products are currently sold in over 80 countries under the Tempur and Tempur-Pedic brand names.
Chieftain Capital Management purchased 528,410 shares on October 1-3 and currently controls 6,573,059 shares of Tempur-Pedic. Tempur-Pedic has 59,545,817 shares outstanding which makes Chieftain Capital Management a 11% owner of Tempur-Pedic.
The company reported the second-quarter financial results on July 24 with the following highlights:
|Net income||$29.1 million|
The company's guidance for full year 2012 net sales is approximately $1.43 billion. In addition, the company updated its full year 2012 earnings guidance and currently expects diluted earnings per share to be approximately $2.80.
Tempur-Pedic and Sealy Corporation (ZZ), a leading global bedding manufacturer, announced on September 27 that they have signed a definitive agreement to create a $2.7 billion global bedding provider.
The combination brings together two highly complementary companies with iconic brands and significant opportunities for global innovation and growth. Sealy, with roots dating back to 1881 is a leader in the manufacturing and marketing of a broad range of high quality mattresses and foundations with a portfolio of well-known bedding brands, including Sealy, Sealy Posturepedic, and Stearns & Foster.
The transaction has been approved by the Boards of Directors of both companies. Stockholders holding approximately 51% of Sealy's outstanding common stock have executed a written consent approving the transaction. No additional shareholder approvals are required to complete the transaction. Tempur-Pedic will acquire all of the outstanding common stock of Sealy for $2.20 per share, representing a premium of approximately 23 percent to Sealy's 30-day average closing price on Wednesday, September 26, 2012. In addition, Tempur-Pedic will assume or repay all of Sealy's outstanding convertible and non-convertible debt, for a total transaction value of approximately $1.3 billion. The transaction, which is subject to customary closing conditions, including regulatory approvals, is expected to close during the first half of 2013.
The stock has a $17 price target from the Point and Figure chart. There have been three insider buy transactions and 12 insider sell transactions this year. The stock is trading at a forward P/E ratio of 9.82. I have a neutral bias for the stock currently.
2. Janus Capital Group (JNS) is a global investment firm offering strategies from three individual investment boutiques: Janus Capital Management, Intech Investment Management and Perkins Investment Management. Each manager employs a research-intensive approach that is distinct within its respective asset class. This multi-boutique approach enables the firm to provide style-specific expertise across an array of strategies, including growth, value and mathematical equities, fixed income and alternatives through one common distribution platform. At the end of June 2012, JCG managed $152.4 billion in assets for shareholders, clients and institutions around the globe. Based in Denver, JCG also has offices in Frankfurt, The Hague, Paris, London, Milan, Munich, Zurich, Singapore, Hong Kong, Tokyo and Melbourne.
Dai Ichi Life Insurance Company purchased 1,535,407 shares on October 1, 2,748,666 shares on September 27-28, 1,209,429 shares on September 25-26, 1,145,147 shares on September 21-24 and 1,055,052 shares on September 19-20. Dai Ichi Life Insurance Company currently holds 28,101,670 shares of Janus. Janus has 201,329,431 fully diluted shares outstanding which makes Dai Ichi Life Insurance Company a 14% owner of Janus.
The company reported the second-quarter financial results on July 26 with the following highlights:
|Net income||$23.4 million|
The stock has a $18 price target from the Point and Figure chart. There have been five insider buy transactions and three insider sell transactions this year. The stock is trading at a forward P/E ratio of 15.34 and has a book value of $7.25 per share. I believe the stock could be a good pick from the current level.
3. Resolute Forest Products (RFP) is a global leader in the forest products industry with a diverse range of products, including newsprint, commercial printing papers, market pulp and wood products. The company owns or operates 21 pulp and paper mills and 22 wood products facilities in the United States, Canada and South Korea. Marketing its products in more than 90 countries, Resolute has third-party certified 100% of its managed woodlands to sustainable forest management standards.
Fairfax Financial Holdings purchased 518,000 shares on September 28 and currently holds 18,978,789 shares of the company. Resolute Forest Products has 99,309,942 shares outstanding which makes Fairfax Financial Holdings a 19% owner of Resolute Forest Products.
The company reported the second-quarter financial results on August 1 with the following highlights:
|Net loss||$20 million|
Richard Garneau, president and chief executive officer, commented on August 1:
"We are encouraged by the positive momentum building in U.S. housing starts and pleased with the effect this gradual improvement is having on our wood products segment. Despite challenging environments, the newsprint segment continues to generate consistent margins, including a noteworthy second quarter 12% EBITDA margin. Keeping with our optimization strategy, we will continue to manage our exposure to export markets where unfavorable currency fluctuations have created difficult conditions for North American producers. We expect a modest improvement in the coated, specialty and newsprint segments as a result of seasonal demand increases, but the impact of recent newsprint and specialty paper mill restart announcements is creating uncertainty. Based on current conditions, we do not see a meaningful improvement in the pulp segment for the balance of the year."
The stock has a $20.5 price target from the Point and Figure chart. There have been four insider buy transactions and there has not been any insider sell transactions this year. The stock is trading at a forward P/E ratio of 13.02 and has a book value of $34.84 per share. I believe the stock could be a good pick from the current level.
4. Ascent Capital Group (ASCMA) is a holding company and owns 100 percent of its operating subsidiary, Monitronics International Inc., one of the nation's largest, fastest-growing home security alarm monitoring companies, headquartered in Dallas, TX, and certain former subsidiaries of Ascent Media Group, LLC.
John Malone purchased 15,000 shares on October 1-3 pursuant to a Rule 10b5-1 trading plan adopted by the reporting person on September 25, 2012.
The company reported the second-quarter financial results on August 8 with the following highlights:
|Net loss||$7.2 million|
Mike Haislip, President and Chief Executive Officer of Monitronics, commented on August 8:
"As consumer demand for a 'smart home' continues to grow, our interactive and home automation services remain a compelling offering. Over 50 percent of our new accounts this quarter subscribed to one or more of these advanced services, which positively impacts RMR per subscriber and net revenues. Our strong and consistent operating performance during the first six months of the year and the relative predictability of our business model gives us a tremendous amount of confidence that we will continue to deliver solid results in the second half of 2012."
The stock has a $68 price target from the Point and Figure chart. There has been one insider buy transaction and there have been five insider sell transactions this year. The company has a book value of $37.27 per share. I believe the stock could be a good pick from the current level.
5. Limited Brands (LTD), through Victoria's Secret, Pink, Bath & Body Works, La Senza and Henri Bendel, is an international company. The company operates 2,619 specialty stores in the United States and its brands are sold in more than 700 company-operated and franchised additional locations world-wide.
Michael Morris purchased 10,110 shares on October 2. Michael Morris serves as a director of the company.
The company reported the second-quarter financial results on August 15 with the following highlights:
|Net income||$143.6 million|
- The company expects 2012 third quarter adjusted earnings per share to be $0.15 to $0.20 compared to adjusted earnings per share of $0.25 per share last year.
- For 2012, the company expects earnings per share of $2.73 to $2.88 versus its previous guidance of $2.63 to $2.83.
The stock has a $77 price target from the Point and Figure chart. There has been one insider buy transaction and there have been 11 insider sell transactions this year. The stock is trading at a forward P/E ratio of 15.51. I am cautiously bullish on the stock currently.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in RFP over the next 72 hours.