Insider Buying Activity
The third quarter of 2013 turned out to be a volatile one for U.S. equity market amid speculation that the Federal Reserve will start easing its bond purchase program soon. The Fed, however, surprised market participants in September by not scaling back its bond purchases.
While all three major indexes posted gains in the third quarter of 2013, it was still a difficult quarter for investors. The volatility has continued in the fourth quarter due to the government shutdown and threats of a possible U.S. debt-default. During such volatile times, it is always useful to check what insiders are doing. Insider purchases generally indicate that the management is confident about the company’s prospects. So let’s see companies that have seen insider buying activity recently.
Alcoa Director Buys 2,480 Shares
Last Thursday, Alcoa Inc. (NYSE: AA) director Martin Sorrell bought 2,480 shares of AA common stock at $8.39 per share. Sorrell made a total investment of $20,807. On the same day, Ratan Tata, who is also a director in the company, bought 2,600 shares at $8.39 per share. Tata made a total investment of $21,814.
This is the second time in the last three months that Tata and Sorrell have bought Alcoa shares. Back in July, both purchased 2,470 shares each.
While Tata acquired the shares at $8.05, Sorrell bought the shares at $8.04 per share.
The most recent purchase from Sorrell and Tata came two days after Alcoa reported its financial results for the third quarter. Alcoa’s quarterly results previously kicked off the earnings season. However, the company has been replaced in the Dow Jones Industrial Average by Nike Inc. (NYSE: NKE) and therefore, its earnings are no longer seen as an official start to the earnings season.
For the quarter ended September 30, 2013, Alcoa reported net income of $24 million, or $0.02 per share. Excluding one-time items, the company’s net income for the quarter was $120 million, or $0.11 per share. The company’s revenue for the third quarter was $5.8 billion.
Alcoa also reiterated its 7% global aluminum demand growth forecast for 2013. The company expects the alumina and aluminum markets to remain balanced.
Alcoa shares have fallen 2.65% this year.
Yum! Brands Director Buys Shares
Yum! Brands Inc. (NYSE: YUM) is another company that saw insider buying activity after reporting its quarterly results. According to a SEC filing, Robert D. Walter, who serves as a director, acquired 20,000 shares of YUM common stock. The purchase was made at $66.09 per share for a total investment of $1.32 million.
Walter has been bullish on Yum shares this year. In fact, he is the only insider to have bought Yum shares in 2013. Walter bought 565 shares at $70.73 per share in March this year. In February, he bought 35,000 shares at $61.95 per share for a total investment of $2.17 million. In January, Walter bought 114 shares at $65.91 per share.
The most recent purchase from Walter came after the company reported its third-quarter financial results. Excluding special items, Yum reported earnings of $0.85 per share for the third quarter. The company’s reported earnings for the quarter were $0.33 per share.
Yum’s worldwide system sales rose 1% before foreign currency translation. System sales dropped 2% in China and remained flat in the U.S. Yum’s results in China were the biggest disappointment. Apart from a drop in system sales, the company also saw an 11% drop in same-store sales in China. Same-store sales in the U.S., meanwhile, were flat during the quarter.
Although the third-quarter performance was disappointing, Yum Chairman and CEO, David C. Novak said that he remains as confident as ever in the company’s ability to deliver strong, sustainable growth in the years to come. Novak said that given a slower-than-expected sales recovery at KFC China and a higher-than-expected tax rate, the company is now estimating a high-single to low-double-digit percentage decline in full-year earnings per share versus prior year, excluding special items.
Yum shares have gained just 0.81% in 2013 so far.
Education Realty Trust Sees Significant Insider Buying Activity
Education Realty Trust Inc. (NYSE: EDR), a self-managed and self-advised real estate investment trust (REIT), has seen significant insider buying activity in recent months.
Last month, Randy L. Churchey, the company’s CEO, bought 20,000 shares of EDR common stock at $8.99 per share. Churchey made a total investment of $179,800.
Randall H. Brown, who serves as Education Realty Trust’s CFO, also bought shares last month. Brown bought 5,500 shares of EDR common stock in September at $9.04 per share. J. Drew Koester, EDR’s Chief Accounting Officer, has bought shares on three different occasions in recent months. Koester bought 10,100 shares at $9.27 per share, 1,100 shares at $9.30 per share, and 700 shares at $9.44 per share. The purchases were made between July 31, 2013 and August 5, 2013.
Education Realty Trust will report its financial results for the third quarter on October 28, 2013. For the second quarter of 2013, the Memphis, Tennessee-based company reported core funds from operations of $14.5 million, or $0.13 per share, compared to $11.6 million, or $0.12 per share reported for the same period in the previous year. The company’s same-community net operating income for the quarter was $15.1 million on a 0.5% decline in revenue and a 2.6% increase in operating expenses.
CEO Churchey noted that the company is nearing the end of the leasing season and the efforts of its team are producing solid internal growth for this fall. Churchey further said that at the same time, the company’s development pipeline and external growth opportunities remains robust, and he is pleased that the Board of Directors recognized this growth with their recent 10% increase in EDR’s quarterly dividend.
EDR shares currently have a dividend yield of 4.74%. The stock has gained more than 4% in the last three trading sessions. Year-to-date, the stock’s performance has been disappointing, falling more than 12.6%, compared to a gain of nearly 20% for the S&P 500 in the same period.
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