Insider Buying: 5 Recent CEO Buys of at Least $100K

by: The Keating Letter

This week I have five stocks with CEO insider buys of at least $100,000. One of the reasons why I regularly do these lists is to learn about companies that I otherwise wouldn’t have come across. There are a few interesting ones in this list that I think require more research and are reasonably priced.

As I’ve previously mentioned, I prefer CEO and CFO insider buying to other buyers. Those two positions give a unique look to the day-to-day operations of the company and should provide better clues to performance or a stock mis-pricing. If any of these stocks look interesting to you, I encourage you to do more research before buying.

Below are five stocks with recent CEO buys of at least $100,000:

TrustCo Bank Corp. NY (NASDAQ:TRST): CEO Robert J. McCormick participated in a secondary for this New York-based bank. McCormick bought $400,000 worth of shares at $4.60 on July 6. The offering raised $68.1 million. The bank has been profitable throughout the downturn and currently trades at a price to book of 1.5. Over the last 10 years it has traditionally traded closer to four times book. The stock is currently yielding 5.3%, but the payout ratio is high. That doesn’t mean there is an immediate risk of a dividend cut, but it’s something to keep an eye on. This appears to be an undervalued stock and a well run bank.

TearLab Corp. (NASDAQ:TEAR): TearLab is a tiny, $37 million market cap ophthalmic device company. It completed a $7 million private placement on July 5 that included 3.85 million units at $1.82 and a warrant to purchase a share at $1.86. CEO Elias Vamvakas participated by spending $190,379 on the transaction.

Rentrak (NASDAQ:RENT): CEO Bill Livek bought $106,000 of company shares on June 29. I also highlighted Livek’s insider buys from March when he was buying in the $23 range. Shares are now about $19. Six other insiders also made purchases since the beginning of June. Rentrak is a $217 million market cap media measurement and research company. StreetAuthority recently highlighted Rentrak as a company that may be set for a comeback in the second half of the year.

EnPro Industries (NYSE:NPO): CEO Stephen Macadam bought $100,600 of shares on June 24. This followed purchases of nearly $120,000 on June 9. EnPro Industries manufactures and markets industrial products such as seals, compressor components and diesel and natural gas engines. Shares are at 52-week highs and have steadily climbed since early 2009.

Kingold Jewelry (NASDAQ:KGJI): This is an interesting stock. It’s a Chinese jeweler that has been caught up in the negative reverse merger news. However, I’ve only seen one piece of evidence that groups Kingold Jewelry with potential trouble. There is a good chance that the stock has sold off for reasons not specific to the company. I’ve just come across the name, though, so I welcome any information from investors who have followed the stock more closely. The stock went public in the U.S. in August last year and has dropped from $8 to below $2. If it is legit, it’s trading at only three times earnings and nearly 20% below its stated cash and inventory with no debt.

CEO Hong Jia Zhi is attempting to soothe investor concerns by making a large purchase of company stock. From June 8 through July 6, he bought 200,000 shares between $1.43 and $1.78. The company also issued an open letter to shareholders in early May. The stock is off 20% since then. It’s inevitable that some legitimate Chinese RTO companies are not risky. If you haven’t been completely scared away from the space, you might be interested in doing some extensive research on this one. Please contact me with what you find.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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