Wait ‘Til You See What These Insiders Are Up To
Although you probably recognize Insider Monkey for our hedge fund coverage, we also monitor insider trading activity. Multiple empirical studies suggest that if you know where to look when corporate executives are buying stock in their respective companies, it is possible to return more than the broader indices. The potential for outperformance is more robust in the hedge fund world, yes, but it’s still worth following insiders.
Jacobs and MTR Gaming
With that being said, let’s run through some of the most prominent insider moves of the past week, beginning with Jeffrey Jacobs and MTR Gaming Group, Inc. (NASDAQ:MNTG). Jacobs, who is the Chairman and CEO of Jacobs Entertainment, sent an updated merger proposal to MTR late last month, offering $30 million to public shareholders. This amount is 22% larger than the $24.6 million offered by Eldorado Resorts, which MTR had announced a merger with in September. The differential corresponds to $5.69 per share versus $5.15 per share.
Jacobs holds a significant position in MTR Gaming, reporting a 5.1 million share-stake in his last SEC filing, worth 18.1% of the company. He first offered to sell Jacobs Entertainment to MTR at the beginning of October, issuing a slideshow supporting his case (see the slides here). In his latest letter to MTR, Jacobs lists tax benefits, revenue diversification, lower cost of debt, and faster regulatory closing as a few of the main reasons why his proposal is more generous, in addition to the higher offer price.
Offshore oil services provider Helix Energy Solutions Group Inc. (NYSE:HLX), meanwhile, saw its President and CEO buy in recently. Owen E. Kratz bought 50,000 shares at an average price of $23.05 each, upping his total holdings in Helix to 5.2 million shares worth $123.9 million of common stock. The CEO has indirect ownership of an additional 1 million shares via a limited partnership, bringing his total stake to 5.9% of the company. Helix shares are up a little under a percentage point since Kratz’s latest purchase.
In a similar light, Coach, Inc. (NYSE:COH)’s CEO has also been buying lately. Lew Frankfort acquired 21,000 shares of the handbag and luggage retailer late last month at a price of $48.38 each. The purchase was worth about $1 million, and Frankfort’s total holdings in Coach now amount to a little over $100 million; it was his first transaction since 2009. Since the buy, Coach stock is up 4.5%.
American Capital Agency
On October 30th, three American Capital Agency Corp.(NASDAQ:AGNC) insiders—Christopher Kuehl, Gary Kain and Peter Federico—bought shares between $21.56 and $21.71 apiece. American Capital Agency stock now trades a bit higher than these prices, but over the longer run, shares are down 33% in the past six months. It’s possible that this trio of insiders is buying on the dip, and the 14.7% dividend yield is still stellar. We’ll be watching this situation very closely, as companies with multiple insider buyers in such a short period of time offer the best piggybacking opportunities.