On the closing bell of Jan 06 2012, the four biggest gainers in the stock market got the upward movement of at least 19% up to more than 58% in a day. Somehow it is noteworthy to look into those situations and see the reasons for the sudden high jump.
The best gainer of the day belonged to First Financial Service Corp (FFKY), it moved from $1.5 per share to $2.38 per share within one day, making the gain of nearly 58.7%. FFKY is the bank offering the personal and corporate banking services and personal investment financial counseling services. It operates around 15 branches in central Kentucky. On the hey-day back in 2006, the price has topped $28.5 per share with consistent dividend until the third quarter of 2009. It has stopped paying the dividend since then and the stock price experienced the free fall. At $2.38 per share, it is trading at 0.2 times book value, negative earnings since 2009. In December 2011, Zack Investment Research has downgraded the stock from a “Neutral” rating to an “Underperform” rating. So the recent ramp up in the price might due to short-term speculation. Nevertheless, on another note, dated back in 2010, the President and the director of the company kept buying in the shares in for the price of $7.3 - $7.8 per share.
The second highest movement Hovnanian Enterprises (NASDAQ:HOVNP), the price advanced from $1.6 per share to $2.24 per share, marking the 40% upward gain in a day. Actually the symbol of HOVNP represents for depositary share representing 1/1000th of 7.625% Series A Preferred Stock in the company. Along with it, in the same day, Hovnanian Enterprise common stock (NYSE:HOV) moved 11.46%. The company involves in the business of designing, constructing, marketing and selling single-family detached homes, attached townhomes and condominiums, mid-rise condo, urban infill and active adult homes in planned residential developments. HOV has been experienced by a lot of gurus from Michael Price, Arnold Schneider, Charles Brandes, George Soros, Richard Sknow and Jean-Marie Eveillard. The business seems to be messy with ups and downs of cash flow, negative equity and significant of long-term debt.
Next is the stock from another bank, Hampton Roads Bankshares (NASDAQ:HMPR), yesterday, the share price run from $2.7 to $3.41 per share, with 26.3% gain. This bank engaged in general community and commercial banking business, emphasizing on individuals, small to medium-sized businesses in South Hampton Roads, Virginia, North- and South-eastern, etc. In its gold day in the range of 2003-2007, the stock price subjected to little movement of around $250 to $350 per share. A little bit opposite valuation-wise with the bank in our first list. HMPR is trading at 0.7 times book value, whereas the 05 year average is at 0.3x on the book. At the end of 2011, Gateway Bank and Trust Co, the division of The Bank of Hampton Roads, subsidiary of HMPR, has been voted “Best Bank” by the reads of the Elizabeth City, North Carolina Daily Advance as part of the publication’s 2011 Annual Readers’ choice Oustanding Service Awards. For insider trading, in the second half of 2011, the Director and CFO has kept buying in the shares at the price of $5.5 - $6 per share.
Last but not least, the fourth biggest gainer was Rare Element Resources (REE), the Canadian mining company, with the advance of 19.5% when the share price jumped from $4.82 to $5.76 per share. REE involves in rare-earth elements and gold. It has 100% interest in the Bear Lodge property, Wyoming, which has a central core area of rare-earth mineralization and a surrounding area of gold occurrences. It was the mining exploration company, still in the drilling process, so it contains a lot of speculation factors.
Out of the four stocks, only the two banks look fit for value investors, the signal is the insider buying at much higher price than the current market price. The other two contains leveraged risky business as well as the exploration speculative business. However, in terms of judging the banks, investors should look deeper into how the banks work, its deposits and its lending practice to see whether it is the prudent act to take action on those positions.
This is the subjective viewpoint of the author, and it is not the recommendation to buy, hold or sell the stocks mentioned in this analysis. Anyone who wishes to buy, hold or sell the stocks has to do his/her own analysis at his/her own risk.
- CEO Buys, CFO Buys: Stocks that are bought by their CEO/CFOs.
- Insider Cluster Buys: Stocks that multiple company officers and directors have bought.
- Double Buys:: Companies that both Gurus and Insiders are buying
- Triple Buys: Companies that both Gurus and Insiders are buying, and Company is buying back.