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Buying into Alcoa, Arnold Van Den Berg and Insiders

January 15, 2013 | About:
One of Guru Arnold Van Den Berg’s fourth quarter new buys was aluminum producer, Alcoa Inc. (AA). He purchased 1,492,980 shares for an average price of $9, the stock close to its three-year low of $8.01.

Days ago, Alcoa reported two insider buys from its directors, Ratan Tata and Martin Sorrell. Both Sorrell and Tata were active in trading the company’s shares in 2012. Whether Van Den Berg followed the lead of insiders in buying into Alcoa, or vice versa, it looks like Alcoa has a pretty active insider trade history to begin with.



Of course, as GuruFocus has mentioned before, when Gurus join insiders in buying into certain stocks, it’s good news.

Since 2007, Director Tata has purchased almost 30,000 shares of Alcoa (Market Overview). Tata was elected as board director about five years ago, and was the head of one of India’s largest business conglomerates, the Tata Group, before retiring in December.

About a year ago, Alcoa elected Sorrell to its board of directors, and has acquired a little over 8,000 shares of Alcoa since then. Sorrell is the founder and CEO of WPP, large advertising and marketing services group. (Market Overview)

Since the year started, Alcoa has reported one sell from Executive Vice President Olivier Jarrault, who eliminated 16,000 shares on Jan. 10.

For Alcoa, share buys have been more prevalent in recent quarters among insiders, over sells. Its stock reached a three-year peak in 2011 when it sold for about $18. Today, the stock trades at $8.90.

1358274261418.pngAA data by GuruFocus.com

When Alcoa reported its fourth quarter earnings on Jan. 8, it revealed that the company met its year-end expectations and that it anticipates that global demand for aluminum will grow 7 percent this year. At this rate, the company forecasts that global aluminum demand will double by year 2020.

While it reported that income from continuing operations in 2012 was $191 million, down 12 percent from the previous year, Alcoa hit record profitability, delivering $1.3 billion in productivity and overhead improvements, while cutting its debt and maintaining its cash position. (View the company’s 10-Year Financials)

The beginning of a new year for Alcoa was not only met by Guru and insider buys, but also a reshuffling of its executive team.

Alcoa Chief Financial Officer Charles D. McLane announced his retirement and will be replaced by William Oplinger, COO of Alcoa’s primary-products business unit, taking effect April 1.

President of Alcoa Forgins and Extrusions has been named COO of Alcoa Investment Castings, Forgings and Extrusions on Jan 9.

And lastly, Engineered Products Controller, Ken Giacobbe has been appointed CFO of Alcoa’s Engineered Products and Solutions.

None of the mentioned insiders have record of previous trading of Alcoa shares, according to the site’s database.

Alcoa is ranked one star in Business Predictability, 5 in Financial Strength and 4 in Profitability and Growth. The company remains 1.43 percent of Van Den Berg’s portfolio.

Other Gurus who have stakes in the company include Manning & Napier Advisors Inc., Mario Gabelli and John Burbank.

View Arnold Van Den Berg’s fourth quarter buys here. Also view Van Den Berg’s stock picks, his undervalued stocks, high-yield companies and top growth stocks.

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About the author:

Dianne Tordillo
Dianne Tordillo is staff writer for GuruFocus.com. She reports on a variety of financial news, primarily dealing with investor portfolios and stock trades. Her articles also highlight insider trades, as well as the many useful features of GuruFocus.

Visit Dianne Tordillo's Website


Rating: 2.8/5 (6 votes)

Comments

swnyc2
Swnyc2 - 1 year ago
But, the number of shares has increased substantially over the last few years (817M in 2008 to 1,161M in 2011. Not a good sign....
swnyc2
Swnyc2 - 1 year ago
And, as for Tata Ratan's insider buying, he's been doing it pretty consistently since 2007 and has sustained a huge loss to date.

Please leave your comment:


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