This past week we have seen a significant increase in CEOs spending some big money on their own companies. GuruFocus research points out that top corporate executives like the CEOs and CFOs are the best performers when studying insider trading. These executives are expected to be the best informed about their companies and in result, their trades have turned out to be the most profitable.
The following four companies reported insider buys coming from their CEOs with transaction amounts totaling over $100,000. These companies come from various sectors of the market, and all of their insider buys have been reported as the companies release their first quarter financials.
1. CYS Investments (CYS)
Coming as the price has hit a 52-week low, CYS Investments reported a costly insider buy coming from the company’s Chairman, CEO, CIO and President Kevin Grant.
On May 6, Grant added a total of 30,058 shares at an average price of $11.96 per share. This cost the CEO a total of $359,494. Since Grant’s buy, share prices have risen 0.75%. The CEO now holds on to at least 555,970 shares of CYS Investments.
Another insider, Director Jeffrey Hughes, bought 50,000 shares of CYS on May 7. His shares traded at $12 for a total transaction amount of $600,000. He now holds on to 174,869 shares of the company’s stock.
These two insider buys come as the company’s price nears a three-year low price of $11.63.
The analysis on CYS shows that the company’s dividend yield is close to a two-year low. The company has offered quarterly dividends since 2009. Its most recent dividend (declared March 21) was $0.32 per share, dropping from the $0.92 per share dividend declared in December 2012. The company has also seen a decline in per share revenue, operating margin and gross margin for the past five years.
CYS Investments is a finance company that invests on a leveraged basis in residential mortgage securities for which the principal and interest payments are guaranteed by the Federal National Mortgage Association. The company has elected to be taxed as an REIT.
The company recently announced its first quarter 2013 results which reported:
· GAAP net loss of $17.7 million, or $0.10 per diluted common share
· Net realized gain from investments of $46.7 million
· Operating expenses equal to 0.94% of average net assets, and
· Net asset value per common share of $12.87 per share after declaring a dividend of $0.32 on March 31.
George Soros and Jeremy Grantham hold shares in CYS Investments. To see the shares these gurus hold, click here.
With its shares down 0.66%, CYS Investments trades at $12.03.
2. Walter Energy (WLT)
Walter Energy reported a cluster buy this week, occurring on May 6. This buy was led by the company’s CEO and CFO. Walter Energy’s CEO Walter Scheller made the largest buy of the day adding a total of 8,585 shares at an average price of $17.57 per share. This transaction cost him $150,838. Since his buy, share prices have gone up 8.88%. Scheller now holds on to 42,291 shares of Walter Energy.
Four other insiders made buys on May 6. These insiders included Director David Beatty, Senior VP and CFO William Harvey, Director Mary Henderson and General Counsel and Secretary Earl Doppelt. These insiders added a combined total of 17,000 shares at an average price of $17.59 each. Their combined total purchase price was $298,720.
These buys came as the company’s price hit a three-year low. Also, as the chart above shows, the insiders at Walter Energy have significantly increased their stake in the company as the price continues to drop.
The analysis on Walter Energy shows that the company has issued $2.3 billion of debt in the past three years. The company has also seen a decline in the per share revenue during the past year.
On April 25, Walter Energy declared a $0.125 quarterly dividend per common share payable on June 7 to shareholders of record as of the close of business May 10, 2013. Walter has offered a quarterly dividend every year since its IPO in 1999.
Walter Energy is a producer and exporter of metallurgical coal for the global steel industry. The company also produces thermal coal, anthracite, metallurgical coke and coal bed methane gas. The company maintains 15 mines in 3 countries. They produced 11.7 million metric tons of coal with sales of $2.4 billion.
Most recently, Guru Steven Cohen increased his position in Walter Energy by over 101%. He now owns 3,348,472 shares of the coal company.
Six other gurus hold stake in Walter Energy. To see the full list of these gurus and the stake they hold, click here.
With its shares down 1.82%, Walter Energy trades at $18.88.
3. Pitney Bowes Inc. (PBI)
Pitney Bowes reported the largest insider buy this past week as the company’s CEO, Marc Lautenbach, added over 60,000 shares to his stake. Lautenbach bought 66,000 shares on May 7 at an average price of $15.36 per share. This cost the CEO a total of $1,013,760. The shares are currently trading up 0.59% since this buy. Lautenbach’s buy marks the first insider transaction for the company since May 2012.
This buy came as the price of the company is nearing a 52-week high price of $15.90.
Lautenbach made his buy a week after the company released its first quarter financials which reported:
· A revenue of $1.2 billon
· Adjusted EPS from continuing operations of $0.42 per share
· GAAP EPS from continuing operations of $0.34 per share
· A first quarter FCF of $107 million
On April 30, Pitney Bowes declared a reduced second quarter dividend of $0.188 per share. This represents a 50% cut from its previous quarterly dividend; it also represents the first time since 1982 that the company has decreased its dividend yield. The company cut the dividend in half in order to provide additional capital to invest in operations. With this most recent cut, the company’s dividend yield is at a 10-year low.
Pitney Bowes provides business communications software, mailing systems and services that integrate physical and digital communications channels. Pitney Bowes helps other companies grow through advanced customer communications management. The company is best known for its production of postage meters.
The GuruFocus analysis on Pitney Bowes shows that the company’s per share revenue has been in decline for the past five years. It also notes its operating margin has also been in a 5-year decline. The average rate of decline is at -8.3% per year.
There are nine gurus that currently hold stake in Pitney Bowes.
With its shares up 1.42%, Pitney Bowes trades at $15.67.
4. Genworth Financial (GNW)
This week Genworth Financial reported that their President and CEO Thomas McInerney bought 10,000 shares of the company’s stock.McInerney bought 10,000 shares on May 7 at $10.89 per share. This cost the CEO a total of $108,900. Since this buy the price of the stock is down -1.84%.
Genworth Financial’s first quarter earnings reports:
- A net income of $103 million, or $0.21 per diluted share.
- Net investment losses, net of tax and other adjustments were $28 million compared to the net investment gains of $17 million in the first quarter of 2012.
- The net operating income was at $151 million compared to $17 million in the first quarter of 2012.
The company also announced that they would be selling their Wealth Management business for $412.5 million.
Genworth Financial is a Fortune 500 company with more than $100 billion in assets and maintains operations in 25 countries.
The company is an insurance company headquartered in the US, with an expanding international base, serving the life and lifestyle protection, retirement income, investment and mortgage insurance needs of more than 15 million people. The company operates out of three segments: retirement and protection, international and U.S. mortgage management.
There are fourteen gurus that currently own shares of Genworth Financial.
With its shares down 2.15%, Genworth Financial trades at $10.45.
The insider buys for CEOs seen above are only the four highest costing CEO buys of the week. To see the complete list of CEOs making insider buys and sells, click here.
- 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.