At InsiderMonkey, we keep track, not only of hedge fund transactions, but also of insider purchases. These can usually be interpreted as bullish signals in relation to a company. Therefore, in this article, we will look into two small-cap companies in the services segment, which have seen insiders buy their stock over the past couple of days.
The first company I would like to examine is MDC Partners Inc (NASDAQ:MDCA), a $1 billion market cap marketing, activation, communications and marketing effectiveness solutions and services provider. Over the past couple of weeks, insiders have been buying this stock like crazies. Actually, a few days ago, MDC´s share price entered into oversold territory, with an RSI value of 28.5. Below, the details of the insider purchases:
– The first acquisition was registered on Feb. 28th, when Robert Kamerschen, Board Director, bought 11,000 shares of the company, for $22.72 each. He now owns 593,098 shares, worth $12.4 million.
– Miles Nadal, Chairman, CEO and President, also increased his stakes at MDC Partners Inc (NASDAQ:MDCA). On March 12th, he bought 25,000 shares of the company for $21.06 each, and on the following day, he procured an extra 5,000 shares, at a price of $22.00 per share. Following these transactions, Mr. Nadal holds 9.19 million shares of the company, valued at more than $192 million.
– Also on March 12th, Michael Sabatino, Senior Vice President and Chief Accounting Officer, purchased 10,000 shares of the company for $21.48 per share. He now owns 210,214 shares of the company. In addition, B. David Doft, Chief Financial Officer, procured 1,000 shares for $21.50 each and now holds 162,119. Same is the case of Mitchell Gendel, Gen. Counsel and Corp. Secretary, who also added 1,000 shares and currently owns 148,593 of them.
– Finally, also son March 12th, Stephen Pustil, Vice Chairman, acquired 10,000 shares of MDC Partners Inc (NASDAQ:MDCA) for $21.36 each. He now owns 577,691 shares of the company.
Despite the bullishness seen here, I should highlight that all of these purchases took place amidst a marked decline in the company’s stock price (it fell more than 16% in the last 3 weeks). Most of them are just taking advantage of an attractive entry point, disregarding the company’s negative margins and returns. Just like insiders, analysts expect the stock price to rise substantially over the next several months. In fact, a mean price target of $29.42 implies an upside potential of almost 50% from the current price of $20.91 per share.
Hedge funds seem to notice this potential too. Several prominent investors including Thomas E. Claugus (Gmt Capital) and Jim Simons hold millionaire stakes in the stock. In fact, both their funds have been increasing their bets on the company lately. In their last 13Fs, they declared respective increases by 50% and 186% on the quarter. Gmt Capital now owns 2.15 million shares of the company, and Simons’ Renaissance Technologies – 807,800 shares.
The second case we would like to refer to is Perficient, Inc. (NASDAQ:PRFT), a $660 million information technology consulting firm that has displayed aggressive growth over the past few years (over the last three, revenue rose, in average, by 20.2% each year; net income grew by an average of 49% on the year). On Tuesday and Wednesday, the company witnessed two insider purchases by John Hamlin, a Board Director. Mr Hamlin acquired 525 shares each day, and paid $19.58 per share on Tuesday, and $19.44 per share on Wednesday.
The stock of Perficient, Inc. (NASDAQ:PRFT) now trades at $19.34, but analysts expect it to rise to $25 per share. With plenty of upside potential, not only insiders are betting on this stock. For instance, prominent investor Chuck Royce holds 464,900 shares of the company, valued at almost $9 million. Ira Unschuld‘s Brant Point Investment Management also holds a big stake in the company: 256,000 shares.
Disclosure: Javier Hasse holds no position in any stocks mentioned