We weren’t sure what to expect from insiders on Wall Street’s computers raining sell tickets on the market last week. Would some see value in their recently discounted stock prices? Or would they cash in and run for the hills?
Some executives didn’t appear overly concerned with the market’s tank job during the corona-crash. Insider buying increased last week compared to prior weeks. There was all sorts of interesting activity, from clusters of insiders at the same company buying simultaneously to big spenders laying out hundreds of thousands of dollars.
Of course, SEC insider buying rules mean corporate suite executives aren’t thinking about two-week swing trading since their regulated focus is at least six months. We identified four insider trades with potential total returns of at least 50% to their consensus, one-year price targets.
Chief Executive Officer (CEO) Mark Zoradi purchased $541,000 and Director Roy Lee Mitchell bucked up $1.97 million to buy Cinemark Holdings, Inc. (CNK) between $25.38 and $28.77. Analysts have a one-year price target of $36.73 on the theater operator with more than 6,000 movie screens in the US and Latin America. 1
Investors could potentially make more than 52% in CNK stock if it hits Wall Street’s 12-month target. Add in the very attractive 5.82% dividend and total upside could reach 60%. Heck, with that yield, it could be a longer-term keeper.
A cluster of five insiders bought more than half a million dollars of Genesis Energy, L.P. (GEL). The street believes the crude oil and natural gas industry operator will hit $20 by this time next year. 2 As we type, the stack is trading for $10.42 per share, offering more than 90% upside to target.
We can’t say for sure the company will continue to pay a divided of $2.20 per share. You just did the math in your head, didn’t you? Yep, that’s a yield of more than 20%. Put the two together and shareholders could double their money if GEL goes from Alexander Hamilton and change to Andrew Jackson. Honestly, we wouldn’t give a lick if Genesis didn’t move a penny as long as they continue to pay that fat dividend.
NGL Energy Partners LP (NGL) is another oil play with a dividend closing in on 20%. WTH is going on with these companies? CEO, H. Michael Krimbill forked up 440 grand at $8.85, adding 50,000 shares to his count. NGL currently trades for $7.54 with a dividend of $1.56. They lost $2.31 per share in the last 12-months. So, a cut in the dividend is not out of the question.
If the refiner managed to hit its one-year price target of $12.93, or 71% higher than where it is today, then the pinch of a smaller dividend wouldn’t be so painful. 3
Pack a few bucks into Ryder System, Inc. (R) like five insiders did in the last week of February, and your haul could top 50% in the next year. Shares of the trucking company currently trade 47% lower than the consensus price target of $54.17. 4 Toss in another $2.24 for the current dividend and it’s a yield of almost 6%. Smash ’em together and it’s another company with the potential to return more than 50% in the next 12-months.
Ryder stands out more than the previous three. Prior to last week, there was only one, just one insider purchase in the last five years. All of a sudden, all the top floor, corner office people come to the same conclusion? It’s time to buy. We’re talking about the CEO, Chief Financial Officer (CFO), Executive Vice President and Corporate Secretary, the President and a Director. It’s a who is who of R’s corporate directory.
More conservative investors might find Cinemark Holdings, Inc. (CNK) and Ryder System, Inc. (R) more to their liking, whereas Genesis Energy, L.P. (GEL) and NGL Energy Partners LP (NGL) are more for the aggressive, let it all ride types. Of the two oil plays with ridiculous dividend yields, our scale would tilt towards GEL as they were profitable in the last 12-months.
1 – https://finance.yahoo.com/quote/CNK?p=CNK
2 – https://finance.yahoo.com/quote/GEL?p=GEL
3 – https://finance.yahoo.com/quote/NGL/sustainability?p=NGL