Let us have a look at four companies that have seen insider activity recently.
Major Shareholder Buys AmTrust Shares
Leah Karfunkel, a major shareholder in AmTrust Financial Services (NASDAQ:AFSI) bought 209,772 shares of the company in the open market at an average price of $31.41 a share as per information filed at the Securities and Exchange Commission. The total transaction is valued at $6.59 million.
Just like directors and officers of a company, major shareholders owning more than 10% of a company’s shares are required by law to file the details of their transactions with the SEC.
The information was filed on December 12, 2013 and the next day, on Friday, December 13, 2013, AmTrust shares opened at $33.67 and closed at $33.64.
AmTrust Financial is a multinational specialty insurance provider of property and casualty insurance and derives its income primarily from underwriting profits. The company is valued at $2.51 billion with a 52-week high of $42.64 and a 52-week low of $25.45.
The company’s most recent quarterly earnings report, released on November 5, 2013, surprised the market with an EPS of $0.83 against consensus analyst estimate of $0.74. For the last four quarters, the company has been consistently surprising the street by reporting 9.38% to 12.16% more income than analyst estimates.
AmTrust has a trailing twelve month EPS of $3.54 and is a dividend paying company with a dividend yield of 1.66% at current market price. Considering that the stock is trading at a significant lower P/E ratio of 9.51 as compared to the industry average of 13.86, it offers a significant upside in the coming months.
Blue Harbor Group Continues Buying Shares of CACI International
Another purchase by a major shareholder was reported for CACI International (NASDAQ: CACI) in a filing with the SEC on December 12, 2013.
Blue Harbor Group that follows an activist investment strategy and a major shareholder in CACI International purchased 88,065 shares of the company in the open market at an average price of $71.64 per share in a transaction valued at $6.31 million.
This is the second time this month that Blue Harbor has bought shares of CACI International. Earlier, it reported a purchase of 17,144 shares at $71.91for $1.23 million on December 6, 2013.
Numbers released for the most recent quarter ended September 30, 2013 showed an EPS of $1.74 beating street expectations by 39.2%. Net income for the quarter was $32.99 million on revenues of $864.27 million, which was lower by roughly $14 million than what the street was expecting.
CACI International is a technology company that provides simulation technology primarily to the federal government. The company operates mostly in areas such as defense, intelligence, homeland security and IT modernization.
Gladstone Commercial Corp. CEO Buys 10,000 Shares
On December 10, 2013, David Gladstone, CEO of the Gladstone Commercial Corporation (NASDAQ:GOOD) bought 10,000 shares of the stock at an average price of $17.79 a share. The latest transaction by the CEO, valued at $177,900, takes his total holding to 466,564 shares valued at roughly $8.30 million.
Gladstone Commercial reported its figures for the most recent quarter on November 4, 2013 revealing revenue of $16.19 million against analyst estimate of $15.71 million. However, on the earnings front, the company failed street expectations of EPS by $0.02 –$0.38 against estimate of $0.40. For the current fiscal year, analysts expect the company to report an EPS of $1.54.
Gladstone Commercial is a real estate investment trust (REIT) with a focus on investment and ownership of net leased commercial and industrial real estate and provides long term mortgage loans. After the release of its quarterly numbers, the shares of the company have slid 7.34% to $17.30 and 3.3% after Mr. Gladstone’s recent purchase.
Hectic Insider Buying By Directors and Officers In 8×8
There has been hectic buying in 8×8 Inc. (NASDAQ: EGHT) and last reported transaction was on November 22, 2013. CEO Verma Vikram bought 25,000 shares at $9.49. The most recent insider buying came almost one month after the company announced quarterly figures for the quarter ended September 30, 2013. The company missed analyst expectations by 1 cent (EPS: $0.05). Net income was $2.23 million on revenue $30.06.
Following news of the purchase by the CEO, the shares of the company shot up to touch $10.15 and then $10.42 on November 29. Later, the stock experienced a slide in price and currently trades at $9.02.
8×8 Inc. provides Unified Communication and Collaboration Services (UCC) for SMEs. The company’s services cover solutions based on cloud telephony and virtual contact, meeting and desktop offerings including VoIP services. The company has more than 35,000 business clients with more than 40,000 subscriptions. The total addressable market for 8×8 is $5 billion that is expected to grow to $20 billion by 2020.
Insider information is defined as information that is not in the public domain as yet and normally gained by someone working in the company or someone associated with it. Using that information to trade is a punishable offence. The SEC keeps track and investigates buying and selling activity of insiders to determine cases of illegality.
However, the law does not bar insiders to buy (or sell) shares of the company they work for or are associated with.
Actually, in lieu of banning insider transactions, the lawmakers did protect the genuine ‘insider’ investor by making it mandatory for them to disclose such transactions. These disclosures – information on who from within the management, major shareholder, auditors and others close to the company is buying or selling the company’s shares – have over time become a handy tool for investors for making investment decisions.
Since the employees of a company have a ringside view of the business and expectedly the only reason they would buy the company’s stock is that they find it undervalued.