CEO John Hart is Bullish on PICO Holdings

CEO John Hart, PICO Holdings: Earlier this week, John Hart, President and CEO at PICO Holdings Inc (NASDAQ:PICO), acquired 40.5 shares of the company’s common stock at $22.77 each. He now holds 32,432 shares, worth about $750K. The ownership is not direct, but through a 401k Plan.

Some positive comments made by Barrons over the weekend led the stock to rise by almost 8% on Monday, when Hart made his purchase. Shares are still on an uptrend, so his timing was not that bad, although he could have paid substantially less 3 or 4 days before.

Actually, Barrons’ observations have created interest in other analysts. Patent News, for example, assured that they “believe PICO Holdings is an interesting long position to consider due to a diverse revenue stream in a number of areas. The water business and real estate business should outperform due to shortages of water in the Southwest and the real estate business plays hand in hand with a real estate recovery” (SeekingAlpha).

Back to Hart, the insider has been purchasing stock from the firm at least once every month (uninterruptedly) since January 2009, so this is not a one-time-only buy. Quite opposite, his bets on the firm are strong and constant. Something similar can be said about some of the big hedge funds that we track: Chuck Royce‘s Royce & Associates holds a $43.1 million stake in the company; Howard Guberman‘s Gruss Asset Management, a $5.5 million bet; and at least four other “hedgies” hold more than $1 million in shares.

However, other insiders are not so big on PICO. According to our database, no other person directly related to the company has acquired stock since Dec. of 2009. So a set of questions still remains: what does Hart see in PICO? Why don’t the company’s unattractive valuation ratios and negative margins/returns dissuade him from incrementing his stake?

Over the long, long term, water scarcity may be one bullish driver behind PICO, but that’s a ways down the road.

Disclosure: Javier Hasse holds no position in any stocks mentioned

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