Notable Insider Action in January

 | Feb 12, 2013 | 4:30 PM EST
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In order to keep my head down and ignore the noise, I spend the bulk of my time each day focusing on what is really important. I make it a point to read Fed filings as they appear and the earnings reports for companies that I own or have an interest in owning. I run my screens every day to see if there is anything new.

Every other day or so, I scan 13D filings at the Securities and Exchange Commission's website to see if anything interesting pops up. At least once a week, I head over to Jon Moreland's Insider Insights to check for interesting insider activity. My research shows that buying by the top two executives at a firm is a huge positive, so I track it frequently to uncover ideas.

Some old friends made the list for the month of January. Insiders at some of our holdings have confirmed my faith in the price and prospects of their companies by opening their checkbooks and buying stock in the open market. In the past month, one director as well as the president and CEO of longtime favorite Huntington Bancshares (HBAN) have reached into their pockets and purchased shares of the bank. This follows on the heels of insider buying we saw in the stock back in November.

Things just keep getting better for this bank. Assets have grown steadily, and capital ratios have improved every quarter. Loan losses have also improved every quarter for two years as nonperforming assets have fallen from over 4% in the first quarter of 2010 to 1.15% of total assets at year-end. The stock price of the bank has moved up nicely over the past two years, but so has the equity and tangible book value of the bank. I own the bank, but it is also at the top of my "buy more in market decline" list.

I have owned shares of Sun Bancorp (SNBC) since Wilbur Ross made a significant investment in the bank back in 2010. We have done OK with the bank but expect to see more gains as the economy and banking sector continue to improve. Sun is seeing its loan portfolio improve -- nonperforming loans fell from almost 8% in the third quarter of 2010 to less than 4% today. The tangible-equity-to-asset ratio is over 10, and tangible book value has reversed its decline and improved in 2012.

Sun Bancorp has a little more of a long-shot flavor that my usual bank pick, but I have a lot of faith in Wilbur Ross and have made money by investing in his deals. At least one insider agrees with me, as the CFO of the bank recently opened his wallet and purchased 20,000 shares of the stock.

Apollo Investment (AINV) is another name I have owned for some time that is seeing renewed insider interest. The CEO of the business-development company recently purchased an additional 10,000 shares. The company continues to shift its portfolio in the direction of more secured loans and has been selling debt and loans lower in the capital structure of the companies in which they invest.

Many investors have been put off by Apollo's recent dividend reduction and equity raise, but I believe it is prudent to deleverage in this environment rather than follow the lead of other BDCs that increased leverage to maintain the payout. The company is also expanding its lending and financing operation in the energy area, a move that could pay huge dividends down the road. Even after the dividend reduction, these shares yield 9.6%, so you get paid to wait for the portfolio changes and stronger energy concentration to drive the stock price higher over the next few years.

Although Akamai's (AKAM) stock is too rich for me, tech and growth investors might want to take note that co-founder and new CEO Tom Leighton bought 50,000 shares in the aftermath of the company's weak fourth-quarter earnings announcement. Leighton already owns a substantial amount of stock, so buying more in the open markets is strong reinforcement of where he believes the business and the stock will go.

A lot of noise circulates around the stock market on any given day. By keeping our heads down and focusing on company-specific information, searching for new stocks and keeping the TV on MLB Network, we can improve results by focusing on only the important stuff.



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