Seeking Alpha

4 Stocks Insiders Are Buying

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Includes: MGM, ODT, RMAX, TTS
by: The Insiders Forum
Summary

Today, we continue a recent weekly feature here on the Insiders Forum.

Each week, we highlight four or five notable stocks with significant and recent insider buying.

This week, we highlight a couple of housing-related concerns as well as a huge casino operator seeing significant insider buying.

"I love New York. You can pop out of the Underworld in Central Park, hail a taxi, head down Fifth Avenue with a giant hellhound loping behind you, and nobody even looks at you funny." - Rick Riordan

After May's debacle that saw the overall market plunge by more than six percent, June has seen a more favorable environment for investors.

All the major indices are on a decent little winning streak so far in the month. Dovish comments from the Federal Reserve hiking the possibility of a rate cut in the coming months and the recent resolution of a tiff between the U.S. and Mexico have been major tailwinds for the nascent rally in equities.

The market has been led by tech, which over six trading sessions earlier in the month advanced some 9%, the biggest six-day rally in over seven years. Outside technology, breadth has not been so impressive.

So which stocks are insiders buying outside technology during this recent rise in the market? Here are three names that caught our eye.

A director and beneficial owner at RE/MAX Holdings (RMAX) has been very active, adding to his core stake in the firm so far this month. Across over 20 transactions in June, he has added over $20 million to his core stake in the firm.

This concern operates as a franchisor of real estate and mortgage brokerage services within the United States and internationally. On May 2nd, the company posted Q1 results that slightly beat both the top and bottom consensus on a 35% year-over-year increase in revenue. That did not stop Craig-Hallum from downgrading the stock to a Hold and lowering its price target a sawbuck to $40 a share. Stephens also placed a Hold on the stock earlier this week.

Source: Earnings Call Slides

One bright side to housing is that average 30-year mortgage rates are near two-year lows. One insider seems to think the company's prospects are solid given his recent purchases.

Next up is another housing related play, Tile Shop Holdings (TTS). Since the beginning of June, one director has bought some 80,000 in new shares in more than a half dozen transactions. Another director has purchased approximately double that, also via numerous small transactions.

The company operates as a specialty retailer of natural stone and man-made tiles, setting and maintenance materials, and other housing-related accessories. Like RE/MAX, the shares are down significantly from recent highs.

The analyst community hates this name almost as much as these two insiders love it (they also bought significant chunks of new shares in December and March). Six analyst firms have issued or maintained Holds on the stock since Mid-February.

The company missed both top- and bottom-line expectations when it reported Q1 results on April 30th. It should be noted the company remains firmly profitable despite the current challenges in this space. The shares pay an almost five percent dividend yield, which should put a floor under them at some point.

Odonate Therapeutics (ODT) continues to see considerable insider buying from its CEO. From June 3rd through June 7th, he added just over $3 million to his core holdings in this San Diego-based oncology development concern. He also was a significant buyer in the shares during December and March; it should be noted. The company went public in December of 2017.

HER2-negative, HR-positive metastatic breast cancer (MBC) is the current focus of Odonate. As can be seen by the chart above, the shares have been quite volatile during Odonate's year and a half of being a public company. The company's primary drug candidate is Tesetaxel which is in late-stage studies. Tesetaxel is an investigational, orally-administered chemotherapy agent that belongs to a class of drugs known as taxanes, which are widely used in the treatment of cancer. The company believes the compound has several attractive attributes compared to current treatments.

Source: Company Website

Finally, MGM International (MGM) has seen some huge insider buying in June. A director has picked up approximately $25 million in additional holdings from May 5th through May 12th.

The stock has been volatile so far in 2019 and goes up and down with sentiment on Macau, the largest gambling enclave in the world, where MGM has a large presence. May gaming growth in Macau recently came in higher than expected.

Earlier this week, Deutsche Bank raised its recommendation on the Macau sector to Neutral from Underweight. The potential purchase of Eldorado Resorts (ERI) by Caesars Entertainment (CZR) have raised the hopes for further deals among U.S. players. One would think that any progress on U.S./China around trade talks would also help sentiment on Macau plays. One insider appears to see a lot of value in MGM shares at current prices.

"The true New Yorker secretly believes that people living anywhere else have to be, in some sense, kidding." - John Updike

Bret Jensen is the Founder of and authors articles for The Biotech Forum, The Busted IPO Forum, and The Insiders Forum.

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