I screened with Open Insider for insider buy transactions filed during the week ending November 2. From this list, I chose the top five stocks with insider buying in dollar terms. Here is a look at these five stocks:
1. Regis Corporation (RGS) is the beauty industry's global leader in beauty salons, hair restoration centers and cosmetology education. As of September 30, 2012, the company owned, franchised or held ownership interests in approximately 10,000 worldwide locations. Regis' corporate and franchised locations operate under concepts such as Supercuts, Sassoon Salon, Regis Salons, MasterCuts, SmartStyle, Cost Cutters, Cool Cuts 4 Kids and Hair Club for Men and Women. Regis maintains ownership interests in Empire Education Group in the U.S. and the MY Style concepts in Japan.
Birch Run Capital purchased 1,975,002 shares on October 31 - November 2 and 551,883 shares on August 30 - September 4. Birch Run Capital currently controls 8,494,082 shares of Regis. Regis has 57,407,876 shares outstanding which makes Birch Run Capital a 14.8% owner of Regis.
The company reported the first-quarter fiscal 2013, which ended September 30, financial results on October 25 with the following highlights:
|Net income [GAAP]||$28.5 million|
Next quarter's average analyst estimate for revenue is $515.2 million. On the bottom line, the average EPS estimate is $0.14. Next year's average estimate for revenue is $2.09 billion. The average EPS estimate is $0.67.
The stock has a $12 price target from the Point and Figure chart. There have been two insider buy transactions and there have not been any insider sell transactions this year. The stock is currently trading at a forward P/E ratio of 15.72 and has a book value of $15.60 per share. I would expect the stock to find support at the $15.60 level.
2. DaVita Inc. (DVA), a Fortune 500 company, is the parent company of DaVita and HealthCare Partners. DaVita is a leading provider of kidney care in the United States, delivering dialysis services to patients with chronic kidney failure and end stage renal disease. As of September 30, 2012, DaVita operated or provided administrative services at 1,912 outpatient dialysis centers in 43 states in the United States serving approximately 150,000 patients, and at 24 centers in five countries outside of the United States that serve approximately 1,000 patients. HealthCare Partners manages and operates medical groups and affiliated physician networks in California, Nevada, Florida and New Mexico in its pursuit to deliver excellent-quality health care in a dignified and compassionate manner. As of September 30, 2012, HealthCare Partners provided integrated care management for nearly 745,000 managed care patients, including more than 190,000 Medicare Advantage members.
Berkshire Hathaway purchased 254,750 shares on October 31 - November 2, 257,941 shares on October 24-26, 63,928 shares on October 16-17, 217,597 shares on October 10-12, 67,946 shares on October 9 and 282,403 shares on September 26-28. Berkshire Hathaway currently holds 11,059,731 shares of DaVita. DaVita has 95.4 million shares outstanding, which makes Berkshire Hathaway a 11.6% owner of DaVita.
The company reported the third-quarter financial results on October 30, with the following highlights:
|Net income||$144.7 million|
The company updated its operating income guidance for 2012 for its dialysis services and related ancillary businesses to now be in the range of $1,315 million to $1,330 million. The company's previous operating income guidance for its dialysis services and related ancillary businesses was in the range of $1,275 million to $1,325 million. Following the close of the HCP acquisition on November 1, 2012, the company expects the incremental operating income contribution from HCP to be in the range of $25 million to $30 million per month for the remainder of the year. The company's operating income guidance for its dialysis services and related ancillary businesses for 2012 excludes the legal proceeding contingency accrual and related expenses of $78 million and transaction expenses related to the HCP acquisition.
The company's consolidated operating income guidance for 2013 is expected to be in the range of $1,750 million to $1,900 million including the operating results of HCP. The company's operating income guidance for 2013 for its dialysis services and related ancillary businesses is expected to be in the range of $1,350 million to $1,450 million and the company's operating income guidance for 2013 for HCP is expected to be in the range of $400 million to $450 million. The company also expects its consolidated operating cash flows for 2013 to be in the range of $1,350 million to $1,500 million.
DaVita's main competitor is Fresenius Medical Care (FMS). Here is a table comparing these two companies:
|Market cap||$10.6 B||$20.7 B|
|Revenue||$7.5 B||$13.2 B|
|Net income||$0.5 B||$1.3 B|
The stock has a $141 price target from the Point and Figure chart. Berkshire Hathaway has been the only insider buying the shares this year. There have been 19 insider sell transactions since April 2012. The stock is trading at a P/E ratio of 20.35 and a forward P/E ratio of 16.18. The valuation is in line with its main competitor Fresenius Medical Care. I am cautiously bullish on the stock currently.
3. XOMA (XOMA) combines a portfolio of innovative therapeutic antibodies, both in late-stage clinical development and in preclinical research, with its recently launched commercial operations. XOMA focuses its antibody research and development on allosteric modulation, which offers opportunities for new classes of therapeutic antibodies to treat a wide range of human diseases. XOMA is developing its lead product gevokizumab (IL-1 beta modulating antibody) with Les Laboratoires Servier (Servier) through a global Phase 3 program in non-infectious uveitis and ongoing proof-of-concept studies in other IL-1-mediated diseases. XOMA's scientific research also produced the XMet program, which consists of three classes of preclinical antibodies, including Selective Insulin Receptor Modulators (SIRMs) that could have a major effect on the treatment of diabetes. In order to retain significant value from its scientific discoveries, XOMA initiated commercial operations in January 2012 through the licensing of U.S. commercial rights to Servier's Aceon (perindopril erbumine) and a patent-protected portfolio of product candidates.
The company reported the second-quarter financial results on August 7 with the following highlights:
|Net loss||$16.2 million|
XOMA announced on October 24 the pricing of 13,333,333 shares of its common stock at a price to the public of $3.00 per share.
The company anticipates cash used in ongoing operating activities during 2012 to be approximately $35 million.
The company has the following anticipated milestones according to a corporate presentation dated October 2012:
|Q4/2012||Initiate POC 3 trial in additional indication - Phase 2||gevokizumab|
|Year-end 2012||POC 1 data readouts for moderate to severe acne vulgaris||gevokizumab|
|2012||Servier to initiate clinical development in cardiovascular disease||gevokizumab|
|2012||XMet licensing discussions||XMet|
|Mid-2013||POC 2 data readouts for erosive osteoarthritis||gevokizumab|
|Mid-2013||POC 3 data readouts for third indication||gevokizumab|
|Q4/2013||Results from NIU trial, followed by Behcet's uveitis trial results||gevokizumab|
The stock has a $1.25 price target from the Point and Figure chart. There has been one insider buy transaction and there have not been any insider sell transactions this year. I have a neutral bias for the stock currently.
4. 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 109,687 shares on November 2, 30,530 shares on November 1, 275,447 shares on October 31, 119,487 shares on October 10, 300 shares on September 27, 113,688 shares on September 26, 1,100 shares on September 20, 103,466 shares on September 13, 53,000 shares on September 12 and 61,079 shares on September 11. All these shares were purchased pursuant to a Rule 10b5-1 trading plan. Mallika Srinivasan currently controls 869,923 shares of the company. Mallika Srinivasan serves as a director of the company.
The company reported the third-quarter financial results on October 31 with the following highlights:
|Net income||$94.5 million|
AGCO is targeting adjusted net income per share of approximately $5.20 for the full year of 2012. Net sales are expected to range from $9.8 billion to $10.0 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. There have been 13 insider buy transactions and four insider sell transactions this year. The stock is trading at a P/E ratio of 6.48 and a forward P/E ratio of 7.91. The company has a book value of $33.23 per share. The stock closed right at the 200 day moving average on Friday which could be a good entry point for the stock.
5. BlackRock (BLK) is a leader in investment management, risk management and advisory services for institutional and retail clients worldwide. At September 30, 2012, BlackRock's AUM was $3.673 trillion. BlackRock offers products that span the risk spectrum to meet clients' needs, including active, enhanced and index strategies across markets and asset classes. Products are offered in a variety of structures including separate accounts, mutual funds, iShares (exchange traded funds), and other pooled investment vehicles. BlackRock also offers risk management, advisory and enterprise investment system services to a broad base of institutional investors through BlackRock Solutions. Headquartered in New York City, as of September 30, 2012, the firm has approximately 10,400 employees in 29 countries and a major presence in key global markets, including North and South America, Europe, Asia, Australia and the Middle East and Africa.
- James Grosfeld purchased 42,400 shares on October 31, 41,900 shares on October 25, 108,098 shares on October 23-24, 99,998 shares on October 19, 200,002 shares on October 18 and 50,000 shares on May 23. James Grosfeld has been a director of the company since 1999.
- Murry Gerber purchased 3,000 shares on May 23 and 6,000 shares on February 2. Murry Gerber currently holds 37,196 shares of the company. Murry Gerber is a director of the company.
- Kendrick Wilson purchased 11,580 shares on February 29 and currently holds 89,600 shares of the company. Kendrick Wilson serves as Vice Chairman.
The company reported the third-quarter financial results on October 17 with the following highlights:
|Net income||$642 million|
|Book value||$140.48 per share|
The stock has a $206 price target from the Point and Figure chart. There have been nine insider buy transactions and 16 insider sell transactions this year. The stock is trading at a P/E ratio of 14.66 and a forward P/E ratio of 12.65. The 200 day moving average is currently at $181 which could be a good entry point for the stock.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AGCO over the next 72 hours.