Insider Trading: Significant Insider Buys from 1/25-29/2010
Chain Bridge Investing (“CB”), on a weekly basis, will shift through the significant purchases — defined as an investment of $100,000 or more — that high level managers make in the companies they operate. While an insider’s purchase of his company is not a guarantee that the stock price will increase, a significant purchase can merit additional research. An insider that places a large sum of his money into the company he is operating, usually has confidence in its future financial results and its market position. Furthermore, the larger the insider’s ownership the more likely the insider will take corporate actions that are in favor of the shareholder, thus another reason for an investor seeking to allocate capital to prefer insider purchases.
Nevertheless, insiders are not always correct, or perhaps, the information/edge giving them the confidence to buy more shares is fleeting. At times, insiders can become blind to the inadequacies and weaknesses of their companies. As a result, CB uses this process as a means of gathering new potential investment ideas that could merit future research after an initial quick analysis is performed. The significant insider purchases of last week tend to focus on the regional banks. The regional banking industry remains depressed an may be good hunting grounds for contrarian-value investors. Enterprise Financial Services (“EFSC”) is making its second appearance on this weekly report (see the report on January 18, 2010). While the Bank of South Carolina, which was on the report from the previous week, did not have any significant purchases last week, its chief executive officer accumulated an additional $73,899 of shares.
The largest purchase of last week was by the chief operating officer of Hovnanian Enterprises, Inc. (“HOV”), a homebuilder. Like regional banks, many homebuilders continue to be depressed at this time. On the surface, its hard to disagree with the depressed valuation given the fact that there is much uncertainty regarding home prices and sales once the government starts removing its support from the industry. Still, the contrarian CB believes the HOV may warrant further consideration. If CB discovers any future investment potential in any of the above mentioned companies, it will be posted on www.chainbridgeinvesting.com.
Furthermore, CB totaled the amounts of purchases and sales from insiders during January 25th through January 29th. Insiders, in this context, are defined as anyone working in the daily operations of the company as well as the chairman of the board of directors, thus pure directors and 10% owners are not included. The amount of purchases by insiders totaled $4,347,275, while the amount of sales by insiders totaled $88,048,882 for the observed period. This represents a sell-to-buy ratio of 20.5x, and continues to demonstrate a lack of confidence within the companies regarding the future.
As a final note, these listings are in no way to be construed as financial advice or investment recommendations. These listings are meant to provide ideas to readers for their own research and show parts of the investment research process of CB. All data is pulled from Stock Pro Investor and Yahoo! Finance. CB is not an investment advisor, please read the disclaimer at www.chainbridgeinvesting.com/disclaimer/.
Insider Stock Purchases 1/25-1/29/10 –
Tagged with Acorn Eenrgy, Enterprise Fianncial Services, Hovnanian, Huntington, Insider Purchases, Insider Trading, Large Insider Buying, Sell-to=Buy Ratio, TrustCo, Valley National, Verizon
