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Monica Wolfe
Monica Wolfe
Articles (757) 

Insider Buys at 52-Week Lows

June 06, 2013 | About:

In the past week three companies have reported significant insider buys as their prices have fallen to 52-week lows. It is interesting to note these buys because they can help you find undervalued, small-cap stocks that are oftentimes overlooked by Wall Street. The following companies represent the insider buys at 52-week lows with the highest total transaction amounts.

ARMOUR Residential REIT (ARR)

With share prices dropping about 30% this month, ARMOUR is currently sitting at a 10-year low price. Both CEOs of ARMOUR decide to take advantage of these lows and increased their stake in the REIT.

Co-CEO, President and Secretary Jeffery Zimmer bought 5,000 shares at $4.97 per share. This buy cost the Co-CEO a total of $24,850. Zimmer now holds on to at least 66,858 shares. Since his buy, the price per share has dropped an additional -0.4%.

Co-CEO and CIO Scott Ulm also added 5,000 shares to his stake. He purchased these shares at an average price of $5.02 per share. This cost Ulm a total of $25,100. Ulm now holds on to at least 139,725 shares of ARMOUR. Since his buy, the price has dropped an additional -1.39%.

ARMOUR has seen increased insider buying as the price has dropped as seen in the graph below.

ARMOUR Residential Management invests mainly in hybrid adjustable rate, adjustable rate and fixed rate residential mortgage backed securities issued or guaranteed by a U.S. Government-chartered entity.

The analysis on ARMOUR reports:

· The company’s revenue has been in decline over the past three years.

· ARMOUR has issued 2.6 billion worth of new shares in the past three years. This usually results in the dilution of existing shareholders.

· The company has issued $18.2 billion of debt in the past three years.

· The dividend yield is at a 3-year high.

· The price is at a 10-year low.

· The P/E and P/B ratios are near 3-year lows of 5.16 and 0.65 respectively.

ARMOUR’s decline comes after the company has expanded from $1.2 billion in assets at the end of 2010. ARMOUR is currently leading the declines in mortgage REITs as concern grows that the central bank will slow its bond-buying program as soon as this month.



With its recent decline in share prices, the Peter Lynch Valuation Chart shows that ARMOUR currently appears to be undervalued:


ARMOUR, which has about $22.5 billion of government-backed home-loan debt, has lost over 16% this year, including reinvested dividends, trailing all real estate investment trusts that buy mortgage bonds in a Bloomberg index of 33 companies. The other REIT that Zimmer and co-head Scott Ulm run—Javelin Mortgage Investment—is the second-worst.

Despite the poor performance, Zimmer wrote in an email—“This year, we are likely to be the number one return on equity player as far as taxable REIT income goes.”

ARMOUR Residential has a market cap of $1.86 billion; its shares were traded at around $4.95 with a P/E ratio of 5.30 and a P/S ratio of 3.80.

Carnival Corp (CCL)

Carnival has been under a lot of pressure from the media this past year. With the company’s ships going up in flames, stranding passengers on a boat with no electricity and a variety of mechanical issues, it’s no surprise that the company’s share price has dwindled to a near 52-week low. Taking advantage of this low in price, Director Randall Weisenburger made a rather large buy of company stock.

Weisenburger added 40,000 shares at $32.95 per share. This buy cost the director a total of $1,318,000. Weisenburger now owns at least 78,477 shares of company stock. Since his buy, the price per share of Carnival has dropped an additional -2.28%.

Weisenburger’s buy notes the first insider buy for Carnival Corp since 2009.

Carnival is a cruise company and one of the largest vacation companies in the world. It has a portfolio of widely recognized cruise brands and is a provider of cruises to all major vacation destinations. Its mission is to deliver exceptional vacation experiences through some of the world's best-known cruise brands that cater to a variety of different geographic regions and lifestyles.

The analysis on Carnival reports:

· The revenue has been in decline over the past year.

· The operating margin has been in a 5-year decline. The average rate of decline per year is -11.2%.

· The CCL stock dividend yield is close to a 3-year high.

· The company’s P/E and P/B ratio is nearing 1-year lows of 15.77 and 1.07 respectively.



According to the Peter Lynch Valuation, Carnival appears to be overvalued:


Carnival Corporation has a market cap of $26.24 billion; its shares were traded at around $32.20 with a P/E ratio of 17.00 and P/S ratio of 1.60. The dividend yield is 3.10%. The company had an annual average earnings growth of 3.7% over the past ten years.

There are currently thirteen gurus that hold stake in Carnival. Click here to see the holding history of all of the gurus.

Silver Bay Realty Trust (SBY)

Recently incorporated Silver Bay Realty Trust reported three insider buys last week as its share prices dropped beneath its IPO pricing.

Director Brian Taylor made two different buys, adding a total of 5,568 shares. The shares traded at an average price of $17.93 per share. These buys cost the director a total of $99,696. Taylor now owns 35,449 shares of Silver Bay. Since his most recent buy, the price per share has dropped an additional 1.4%.

General Counsel and Secretary Timothy O’Brien bought 3,000 shares of Silver Bay at $18.06 per share. This cost O’Brien a total of $54,180. He now owns 7,714 shares of company stock. Since his buy the price per share has dropped an additional 2.27%.

Silver Bay Realty focuses on the acquisition, renovation, leasing and management of single-family properties for rental income and long-term capital appreciation. The company’s primary source of revenue comes from the leasing of single-family homes in Arizona, California, Florida, Ohio and Texas.

Silver Bay has a market cap of $687.8 million; its shares were traded at around $17.65 with a P/S ratio of 183.40.

There are currently four gurus holding shares of Silver Bay Realty Trust, with Steven Cohen holding the most stake in the company. Cohen currently holds 5.77% of shares outstanding. To view the gurus’ holding history of Silver Bay, click here.

You can view all insider trades of companies at 52-week lows by using our all-in-one screener. To view all insider buys and sells in the past week, click here.

Rating: 3.3/5 (6 votes)


Jonmonsea premium member - 4 years ago
Great additional detail on 52 week lows

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