CEOs Buying Their Own Companies at a Discount
Investors couldnt have missed seeing the recent waves of new corporate share buyback plans. What they may have not noticed as clearly is the increasing trend in legal insider trading when CEOs and corporate insiders are buying stock in the open market now that shares have come so far off the highs. 24/7 Wall St has tracked some of the key insider trades in recent days, and the numbers are impressive.
Insiders may sell shares for a myriad of reasons that have nothing to do with the underlying fundamentals of a company. But when insiders buy shares of the company in the open market, it is almost certainly because they think the shares are undervalued or will rise in the future.
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We therefore ignored the large acquisitions by a holding company or an activist. We aimed to identify the top insiders who bought shares in the open market, taking the action as a statement they think shares are cheap, or at least oversold. Some of these CEOs and Officers are already up huge on their purchases. Maybe they are on to something and understand how their companies will fare in this economy better than what overall market panic might indicate.
Companies Whose Own CEOs Are Now Buying:
Titanium Metals Corporations (NYSE:TIE) chairman Harold Simmons grabbed his checkbook to buy shares. Simmons spent some $8.2 million to buy 600,000 shares of common stock at a volume-weighted average price (VWAP) of $13.6492. Simmons owns millions of shares with his spouse and via other entities under his control. Other officer and insider purchases were recorded as well in recent days. Shares are back up to $14.85, and the 52-week range here is $13.80 to $22.93. TIE was an $18 stock as recently as August 2.
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Equity One Inc. (NYSE:EQY) is a community shopping center REIT, and the Chairman, Chaim Katzman, has spent another $5.5 million or so on multiple days at multiple prices to buy shares. One day alone was a 215,168 share buy at a VWAP of $17.40, and other prices were below $17.00. Katzman now holds more than 52 million shares, and the price is back up above $17.50. The 52-week range is $15.07 to $20.27, and the REIT has a current dividend north of 5%. Keep in mind that the stock traded around $20 as recently as July 22.
Amphenol Corprations (NYSE:APH) chairman Martin Loeffler spent $4.99 million buying 115,300 shares of the cabling company on August 5 at a VWAP of $43.31. Shares are already back up to $46.75, and the 52-week trading range was $39.61 to $59.11. It is interesting to know that insiders were selling shares early in 2011 at prices closer to $55.00. The Chairman must think Amphenol has sold off too much.
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Leap Wireless International Inc. (NASDAQ:LEAP) has been pounded of late, but chairman of the board Mark Rachesky bought shares under the MHR entities, where he effectively raised his stake by another 166,000 shares bought at a price of $7.1434 (VWAP), and took the stake to 25.9%. He previously purchased 500,000 shares at $6.46 for some $3.22 million. Shares are now at $7.65, and the 52-week range is $5.78 to $17.66. What matters here is that LEAP was a $10.00 stock as recently as August 3 and a $15.00 stock as recently as July 22 before the huge selling wave hit. Dr. Rachesky is the co-founder and president of MHR Fund Management LLC, which is an investment manager of various private investment funds.
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Huntsman Corporation (NYSE:HUN) is a former buyout target that did not get acquired. It turns out the Huntsman family sees value here: Officers Peter Huntsman bought 100,000 shares at $11.37 for over $1.1 million, and Jon Huntsman bought 200,000 shares at $11.48 per share for proceeds of $2,296,000.00. Shares of this $3.3 billion chemical company are already back up at $13.93, and the 52-week trading range is $8.47 to $21.52.
Morgan Stanleys (NYSE:MS) CEO James Gorman last week showed his conviction and confidence in the company & albeit a bit too early. Gorman spent more than $2 million in open market transactions for 100,000 shares at VWAP of $20.6207. The shares were purchased in multiple transactions at prices ranging from $20.555 to $20.73, and the date of the transaction is August 4. Morgan Stanley shares fell below $16.50 at the peak of the selling panic this week, but the stock is back up to $17.50. Gorman was making a statement, but he jumped in a bit too early before the U.S. downgrade and before the E.U. bank mess.
Greenbrier Companies Inc. (NYSE:GBX) saw waves of insider buying from its president & CEO William Furman this week. He bought roughly 100,000 shares of stock at prices of $12.92 to $15.00. He now holds about 1.3 million shares. Greenbrier manufactures railroad car equipment as well as marine barges. The 52-week trading range is $9.10 to $30.38.
Charter Communications Inc. (NASDAQ:CHTR) is freshly under a share buyback plan now that it has emerged from Chapter 11. CFO Christopher Winfrey purchased some 25,000 shares at $46.02 for a total of about $1.15 million. Shares are back up to $47.50, and the 52-week trading range is $31.36 to $61.15. With the CFO buying shares as well as a $200 million share buyback plan, it seems the company may actually believe in its own worth.
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Annaly Capital Management, Inc. (NYSE:NLY) is going to benefit from the new perpetually low rates courtesy of Ben Bernanke and for the fact that the debt ceiling issue is behind us. Kevin Keyes, chief strategic officer and head of capital markets, has decided that Annaly will be able to keep borrowing at next to nothing rates, and buying mortgage products so that the REIT can pay out 90% of its income for massive yields. He spent more than $850,000, buying 50,000 shares on August 8 at $17.13 VWAP. With this purchase, he doubled his stake in the company. Shares are back up to almost $18, and the 52-week trading range is $14.05 to $18.79. NLY one has a double-digit dividend yield at the current payout.
Dominion Resources, Inc. (NYSE:D), a producer and transporter of power, had a buy in window open up when five insiders acquired more than 15,000 shares in direct market purchases. The insiders included the CEO and CFO as well as as directors. They bought at share prices of $46.11 to $48.21. Shares are back up to $48.00, and the 52-week range is $41.13 to $50.45. Keep in mind that Dominion is a $27 billion company.
Windstream Corporation (NASDAQ:WIN), the rural telecommunications services provider acquiring Paetec Holdings Corp. (NASDAQ: PAET), has seen president & CEO Jeffery Gardner buy 17,800 shares along with VP Grant Raney. Chairman Dennis Foster bought 10,000 shares as well. The various purchases were a mix of non open market and direct purchases at prices between $11.00 and $11.50. These same insiders had also made indirect and direct purchases of shares in May and June at prices closer to $13.00. What is interesting is that these insiders are growing shares during the midst of an acquisition of broadband provider Paetec for more than $700 million.
Middleburg Financial Corporation (NASDAQ:MBRG) is interesting, even if it might not seem the biggest buy in the world. Ousted Berkshire Hathaway executive David Sokol spent about $260,000 to buy 8,317 more shares of Middleburg at $14.56, and another 11,000 shares at $14.38. Sokol now has over 1.4 million shares, direct and indirect, and he has been thought of as a buyer of the banking and financial services company. MBRG trades only about 10,000 shares a day, and has a $101 million market cap. Its 52-week trading range is $13.33 to $19.00.
Ligand Pharmaceuticals Inc. (NASDAQ:LGND) may seem like a light purchase on the surface, but the purchase is after a period of real weakness, when shares fell from $13.50 to $11 before the recent market stabilization. Todd Davis, a director, bought 15,000 shares at a VWAP price of $10.90 in multiple transactions at prices ranging from $10.668 to $11.239. The transaction doubled his direct ownership stake of 29,201 shares. Another director, Jason Aryeh, bought 2,000 shares at $10.57, and another director, Sunil Patel, bought 5,000 shares at a VWAP of $10.74. The transaction was after earnings. The 52-week trading range of $8.14 to $14.80. Ligand also trades only about 133,000 shares a day, so this stood out more than many investors might have given it credit for.