When an insider of a company wants to purchase or sell shares of their companiy’s stock, by law they have to file their intentions with the SEC. This is to prevent any type of illegal activity, such as selling the stock just before an earnings report that the insider knows will be disappointing or buying it before a positive earnings surprise.
Fortunately for us, this can help us decide whether or not to invest in a particular company. I always check to see what the insiders are doing before I make an investment. I particularly like to see if they insiders are buying it after the price has fallen dramatically.
There are many reasons why an officer or a director of a company may decide to sell their stock. They could need to raise money for things such as tuitions, buying a home, or paying off their bookies.
But an insider will only buy their company stock for one reason, and one reason alone. They believe it will go higher!
These stocks came up on my radar screen as potential buys due to the significant insider buying that has recently occurred.
Click to Enlarge Realogy Holdings Corp (NYSE:RLGY) provides real estate services. It owns brokerages, franchises, and title and settlement services. Some of the franchises are well-known, such as Century 21 and Sotheby’s International Reality.
There is some important news in this sector and that could be why the stock price has fallen. A class action lawsuit filed by some powerful attorneys alleges that the National Association of Realtors and some large real estate brokerages make buyers pay inflated commissions.
The stock has fallen about 70% over the past year. Ryan Schneider is the President and CEO of Realogy. He must think the selloff is overdone because he just invested $1,000,000 of his own money in the stock.
Wall Street doesn’t like this company. Eight firms follow it and three have sell ratings on it while four others have it as a hold. There is one buy recommendation. My guess is that this is a firm that has RLGY as a client.
Mueller Water Products (MWA)
Click to Enlarge Mueller Water Products, Inc. (NYSE:MWA) makes and sells products that are used in the transmission of water. They make things like pipes, valves and meters. It is a very old company with a lot of history. It was founded in 1857.
Water company stocks had a rough year in 2018 and MWA was no exception. It seemed to be turning around when it rallied over 20% from December through May. However, a weak earnings release caused the stock to fall dramatically last week.
Bernard Rethore is a director of the company. He must believe that the stock is a bargain at these prices because he just spent almost $100,000 when he purchased 10,000 shares at $9.91.
Wall Street likes this stock. Out of the 13 firms that cover it, seven have buy recommendations on it and the average target price is $12.
NCI Building Systems (NCS)
Click to Enlarge NCI Building Systems Inc. (NYSE:NCS) manufactures and markets metal products for the nonresidential construction industry. It also provides metal coil coating and other related services.
NCS has not had a good year. It has been downgraded by both UBS and D.A. Davidson. In addition, the most recent earnings report was a disappointment to investors. As a result of this the price of the stock has dropped from $22 to $6 since over the past year.
James Metcalf is the CEO and Chairman of the company. He apparently believes that the selloff is overdone because he just invested almost $600,000 of his own money. He paid $6.02 for 96,000 shares.
The Street is neutral on NCS. Six firms follow it and the average rating is a hold.
Koppers Holdings (KOP)
Click to Enlarge Koppers Holdings Inc. (NYSE:KOP) is in the lumber business. It operates as a holding company and produces things such as treated wood products, wood treatment chemicals, and carbon compounds. Railroads and Utilities are some of the largest customers.
This company’s share price fell over 50% from last April due to concerns over earnings. Since then KOP has surprised shareholders by beating estimates. It is up 80% YTD! There has also been a few significant upgrades by the brokers that follow it.
Michael Johnson is the Vice-President of Utility and Industrial Production.
Mr. Johnson must believe that the share price will continue to appreciate. He recently bought 10,000 shares at $29.08. That is a $300,000 investment!
AG Mortgage (MITT)
Click to Enlarge AG Mortgage Investment Trust Inc. (NYSE:MITT) is a REIT. REIT is an acronym for Real Estate Investment Trust. The company focuses on investing, acquiring, and managing a portfolio of residential mortgages. In other words they buy and manage apartment buildings.
Like most REITs, MITT is very interest rate sensitive. Because of these dynamics the stock price has fallen by about 10% since April.
This could be why Mr. David Roberts, the CEO and President, decided to invest $825,000 when he just paid $16,53 for 50,000 shares.
The Street seems to be neutral on this one. Only two firms cover it and they each have hold ratings on it.
Click to Enlarge Ferro Corp. (NYSE:FOE) is in the specialty materials manufacturing business. You may not recognize the name but you are probably familiar with its products. Ferro produces things like porcelain and glass enamels. It also makes ink, glazes and the color coating that goes on them.
Share holders have been disappointed but maybe now there is a reason to be optimistic.
Peter Thomas is the Chairman, CEO, and President of the company. He has watched the price of his company’s stock fall by about 30% since September. He must believe the stock is a good value at these prices. He just invested $270,000!
Wall Street also likes this company. Eight brokers follow it and the average price target is around $20. That’s about 30% higher than where is its currently trading.
Click to Enlarge Mosaic Co. (NYSE:MOS) is in the fertilizer business. They produce and sell things like concentrated phosphates and crop nutrients. They also make animal feed. It goes without saying that the biggest customers are farmers.
Mosaic’s stock recently fell because they announced that they would be cutting production of certain products. JP Morgan must believe the selloff is overdone. They just upgraded it to “overweight”.
Clint Freeland must also believe that the selloff is overdone. Mr. Freeland is the Chief Financial Officer and a Senior Vice-President of the company. He just invested $100,000 of his personal money when he bought 4,250 shares at a price of $23.60.
At the time of this writing, Mark Putrino did not hold any positions in any of the aforementioned securities.