"The greater the passive income you can build, the freer you will become." - Todd M. Fleming
We continue our new weekly feature today. Every week we will be providing very brief overviews of five interesting stocks insiders are currently buying. I have always found insider buying one of best indicators that a stock may be undervalued.
In fact, insider buying was a great "tell" that the market had gotten oversold during the fourth-quarter sell-off. Insider buying hit an eight-year high in December.
Here are five stocks that have had significant insider buying over the past two weeks for consideration.
The stock has declined marginally since becoming its own public entity - not unusual for spin-offs. The analyst community is not sanguine about the company's near-term prospects judging from the five "Hold" ratings issued since October with no "Buy" ratings over that time span. A director evidently has a different opinion based on last week's purchase.
Diamondback Energy (FANG), which has seen frequent selling over the past two years, sees its first insider buy since May of 2017. The COO of the company bought just over a half a million dollars' worth of shares on March 8th.
The shares have a largely marked time over the past two years. The stock is near the bottom of a two-year trading range after falling some 25% from recent highs (see above). The company posted mixed fourth-quarter results on February 20th. This week Barclays reiterated its Buy rating and $189 price target on FANG, while on the same day (March 11th) JPMorgan initiated the shares as a Buy with a $148 price target. Morgan's analyst "sees Diamondback as a premier oil-levered name and added the shares to his firm's U.S. Analyst Focus List. Between the upstream, minerals and midstream businesses, Diamondback is a unique 'triple threat' of potential value creation"
Six Flags Entertainment (SIX) has been in the news of late for a variety of reasons. The company announced in early March that its Chairman/CEO would retire by early next year and is looking for a successor. In mid-February, the company pushed back its target of achieving $750 million in EBITDA a year to FY2021 and delayed the opening of some planned amusement parks in China by roughly a year as well.
The recent round of disappointing news has knocked the stock down to near 52-week lows. The decline has brought about some "bargain hunting" by two directors who bought 20,000 shares (nearly $1 million worth) in a half dozen transactions between March 8th and March 12th. They certainly will be "paid to wait" for a rebound given the shares yield north of six percent.
Activision Blizzard (ATVI), whose stock has been hit in 2019 after the announcement of a significant restructuring in February right after it issued disappointing guidance and largely in line Q4 results in mid-February, sees some significant insider buying. A director bought over $4 million in new shares on Tuesday. It is the first new insider purchase I can find in this equity since the summer of 2016.
The stock is off more than 40% from highs achieved last summer. The shares hovered just above the 52-week highs, and the stock does look like it is trying to establish a bottom recently.
Telenav (TNAV) sees another insider buy. A director bought just over $600,000 shares on March 13th. This was the fifth insider buy for this individual in 2019 after acquiring just over 160,000 shares in aggregate with his previous buys.
The stock has been trending up of late. The company is a provider of location-based services and products for connected cars and advertising. These offerings are provided through the company's car and advertising platforms and include GPS satellite navigation, local search, automotive navigation solutions, and mobile advertising. Telenav was primarily a mobile navigation and advertising business a decade ago, but now derives most of its revenue from Ford (NYSE:F), as well as other automobile manufacturers and Tier 1 suppliers.
Telenav is currently completing the transition from a mobile navigation company to a connected car solutions provider. With infotainment likely to play a large role in future cars, autonomous or otherwise, the company is positioned through its agreement with GM (NYSE:GM) to grow significantly over the next half decade in an industry that should also grow substantially. Telenav has nearly $2 a share in cash and recently achieved positive cash flow. In addition, given the company's small market size and growing niche, one has to think being acquired by a larger concern is at least a possibility in the foreseeable future.
"Some people plan on being disciplined as soon as they achieve something that cannot be achieved without discipline." - Mokokoma Mokhonoana
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Disclosure: I am/we are long ATVI, TNAV. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.