3 Stocks With Massive Insider Buying

When looking for stocks, I focus on standard criteria such as low price to earnings multiples, growth at a reasonable price and significant insider activity. Three stocks that recently flagged up with a high level of insider buying are Jernigan Capital (JCAP, Financial), Ascena Retail Group (ASNA, Financial) and ProMetic Life Sciences (PFSCF, Financial).

Jernigan Capital Inc.

Dean Jernigan, chairman and CEO of Jernigan Capital, bought $112,321 of stock on Dec. 28 at an average price of $16.34 and follows purchases of $486,200 on Dec. 14 at $15.24 and $455,100 on Dec. 9 at $15.02. In fact, there has been a huge amount of buying by a number of directors since the price fell through the $20 IPO price.

The company was launched to take advantage of strong demand for self storage units that has resulted in rising occupancy, higher rents and record industry earnings. In spite of this, the stock has traded down since its IPO in March and took a sharp turn lower after the startup reported a $1.41 million loss for the third quarter due to a slow start in deploying capital. However, the company has been busy and is near to closing on a number of deals. Jernigan said at the results meeting:

“At quarter-end, we had approximately $117.0 million, or 106% of our IPO net proceeds, committed to high-demographic development investments with 49.9% profit participations. We currently have total closed loan commitments and executed term sheets for new loan commitments aggregating $302.1 million and a pipeline of approximately $359.1 million of additional projects currently in underwriting. We believe we have built a platform that can accommodate asset growth to a level in excess of $1.0 billion with minimal incremental cost.”

The market would do well to listen to Jernigan, who has a long and successful track record in the self storage market. He began his tenure in the industry in 1984 when he founded Storage USA, a company he took public in 1994. He grew Storage USA from a single property to more than 570 properties at its peak. During its life as a public company and under his leadership as chairman and CEO, the company returned a 17.5% compounded annual return to its investors.

Following the sale of the company to GE Capital, he formed Jernigan Property Group, which assembled a portfolio of 17 properties in a short 18 months, seizing upon the opportunity of a short acquisition cycle that presented itself. In 2006, Jernigan accepted the challenge of rebuilding and rebranding U-Store-It, which became CubeSmart. During his tenure as CEO, the company’s market capitalization more than doubled from approximately $2 billion to more than $4 billion.

With the stock price at $14.25, investors may want to follow Jernigan who bought in at $16.34. Trading below book value, the stock is now at a discount to its $20 IPO and management appear to be snapping it up.

Ascena Retail Group Inc.

Ascena Retail Group stock is down 44% from the 2015 high of $17.59 after the company reported disappointing losses for the year ended July 2015 followed up with disappointing guidance. But recent results suggest things are improving again for the plus-size clothing and accessories retailer with the acquisition of Ann Taylor now completed, insiders have recently loaded up on the stock at around the current $10 price level.

On Dec. 1 the company reported 2016 first quarter results as net sales increased 40.0% to $1.672 billion and adjusted earnings improved 10% to 36 cents per diluted share compared to 33 cents per diluted share in the first quarter of fiscal 2015. David Jaffe, president and CEO, commented:

"On the operating front, we were pleased with first quarter earnings, which exceeded our expectations. We saw strong sales performance at maurices and Lane Bryant, and significant gross margin rate recovery at Justice, Ann Taylor and LOFT." Jaffe went on to add, "the initial phase of our integration of ANN INC. is progressing well, along with each of the synergy work-streams. We are increasingly confident that the Justice turnaround is gaining traction, and we're excited about the continuing improvement of Lane Bryant fundamentals, along with the sustained strength of maurices performance."

Management backed up these words with action and, on Dec. 18, co-founder and chairman Elliot S. Jaffe acquired 100,000 shares in the company at an average price of $9.70 per share in a $970,000 transaction. David Jaffe also followed with purchases on Dec. 23 of 8,300 shares at $9.90 and on Dec. 24 a further 4,900 shares at $10.09, which together totaled around $130,000.

Brokers seem to agree with an average target price of $16.69 across 13 brokers with consensus forecasts for annual growth of 20% and EPS of 78 cents for year end July 2016.

ProMetric Life Sciences Inc.

ProMetric Life Sciences director Kurt Stefan Victor Clulow acquired C$3.1 million of ProMetric stock in three purchases on Dec. 21, 29 and 31.

ProMetric is a small biotechnology firm that currently generates revenue from bioseparation services, such as their proprietary Plasma Protein Purification System, which extracts multiple products from a single plasma sample, and has a significant pipeline of plasma agents for a wide range of potential applications, including the treatment of liver disease, wound healing, autoimmune disease and other inflammatory conditions.

Prometric has made significant clinical progress across its diverse portfolio throughout 2015, but the stock really took off in the final quarter, increasing from C$1.87 to C$3.50, after the company announced on Oct. 27 that the FDA had completed its review and cleared the Investigational New Drug (‘IND’) application for ProMetrics IVIG for the treatment of immunodeficiency diseases.

On Dec. 17, the company updated fourth quarter guidance and confirmed that the product sales figure would be in line with guidance at $21 million, representing a 94% increase on the 2014 figure C$10.8 million.

Commenting on the product revenue growth, Bruce Pritchard, ProMetric’s COO said, “Our bioseparation products are now used in the manufacture of 17 regulated biopharmaceutical products approved for sale by either the FDA or the EMA. We expect revenues from bioseparations products to increase significantly over the coming years as licensees of ProMetic’s proprietary plasma manufacturing process begin to increase production.”

Additionally Pierre Laurin, ProMetic’s President and CEO noted, “We estimate that within 5 years, the sale of bioseparation products should be generating more than C$75m in revenues from existing and new clients and coupled with our PPPS™ partners.”

Biotechnology stocks are not for the fainthearted, but ProMetrics has had a lot of good news recently and insiders, such as Clulow, still appear to believe it is good value with his Dec. 31 purchase of $937,738 of stock at C$3.42. Other investors may choose to follow.

The author is a blogger for SurgingEarnings.com.

Risk Disclaimer: This article does not constitute a recommendation to buy or sell. Investing in stocks or other securities and derivatives is a high-risk activity and not suitable for everyone. It is strongly recommended that individuals should consult with a SEC-registered investment adviser prior to making any investment decisions.

Disclosure: The author holds no positions in any of the stocks mentioned nor has any intentions to initiate any in the next 72 hours.