People that have trust issues only need to look in the mirror. There they will meet the one person that will betray them the most." - Shannon L. Alder
Equities have taken a big hit over the past few trading sessions on escalating trade tensions between the two biggest economies in the world. Monday saw the worst one-day performance for the market so far in 2019 as all the major indices fell some three percent. Investors did get a welcome respite from the deep sell-off Tuesday as the S&P 500 and NASDAQ bounced back nearly one and a half percent. Unfortunately, that relief seems to be short-lived as the market is down significantly in early going in trading this Wednesday.
This turbulence is coming as Q2 results continue to hit the wires. So, what stocks are insiders still buying during the recent carnage in the market? Here are three names that caught our eye.
Let's start with Ford (F). It sees a nearly an $8 million insider purchase on August 1st by its Executive Chairman William Clay Ford Jr. Another director bought almost $100,000 in new shares a few days earlier. The stock has held up well despite a slowing global economy.
The company posted mixed Q2 results in late July and offer some tepid forward guidance as well. Morgan Stanley upgraded the shares from Equal Weight to Overweight this morning citing strategic actions like its Volkswagen partnership and as well as its electronic vehicle commitment.
There is some mixed analyst opinion on Ford right. RBC Capital reissued its Hold rating and lowered its price target 50 cents a share to $10.50 after Q2 results and guidance. The shares are not expensive at just over seven times this year's expected profits. The stock also yields a very healthy six and a half percent. One insider is signalling his confidence in the company's prospects it would seem.
Generic giant Mylan (MYL) sees its first insider buying in over three years last week as two directors buy nearly $1.1 million in aggregate in buys on July 31st and August 2nd.
As can be seen above, the last year has been a rough one for Mylan's shareholders. The stock does seem to be trying to put in a bottom recently near 52-week lows. The company recently agreed to merge with Pfizer's (PFE) Upjohn unit. Mylan's shareholders will get 43% of the new entity that will be formed through a reverse Morris Trust transaction.
On the back of this announcement, four analyst firms, including Citigroup and Barclays, have reiterated Buy ratings over the past week. Price targets proffered have ranged from $25.00 to $34.50 a share. Evidently, a couple of insiders believe there is value in this recently announced combination as well.
Finally, we have a controversial stock that just saw a huge new insider buy which is the first insider purchase in this name since March of 2017. That company is USA Technologies (USAT). This small cap concern is based just outside Philadelphia and provides wireless networking, cashless transactions, asset monitoring, and other value-added services.
A beneficial owner added one million shares to his already substantial stake (approximately 7.2 million shares before the transaction) in the firm on August 1st. This seems to be in connection with Hudson Executive Capital with disclosed a 12% stake in USAT on May 20th.
This company has been quite challenged over the past year. Earlier this year, the company had to restate some previous financial statements. The stock has behaved better so far in 2019. USAT has few fans among analysts. I can find only two analyst ratings on the stock so far in 2019. Northland Securities downgraded the name to Market Perform from Outperform on February 7th of this year. Lake Street reiterated its Hold rating and $7 price target on the stock on June 6th. At least one investor seems to believe the company has an undervalued long-term future based on recent purchases.
Finally, we see some major insider buying in Equitrans Midstream Corporation (ETRN). As noted in a recent article here on SA, the company has hit challenges and cost overruns building out its Mountain Valley Pipeline.
The company has not rewarded shareholders much in its brief time as a public company. Insiders appear to believe in the company's long-term prospects, however. A director, the CEO and the CFO picked up over $3.5 million in shares in aggregate from August 1st through August 5th.
It should be noted that analysts are not currently sanguine as insiders on ETRN. Since mid-April, five analyst firms including Barclays, Credit Suisse, and Merrill Lynch have initiated new hold ratings or reissued existing hold ratings on this midstream operator. With the recent decline, the shares yield nearly six percent.
And, those are four possible names with significant insider buying for further due diligence for those investors that may be looking for new equities to buy during the recent turmoil in the markets.
It is more shameful to distrust our friends than to be deceived by them." - Confucius
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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.