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As Shiloh Industries Sinks, Insiders Are Quietly Buying

Unnoticed by the stock market, insiders at Shiloh Industries (NASDAQ:SHLO) continue to quietly accumulate shares.

On Wednesday, Curtis Moll, a director at the automotive parts manufacturer filed a Form 4 report with the SEC, informing the latter of his July 1 purchase of 15,400 Shiloh shares at an average price of $12.95 each. In total, Moll paid just under $200,000 for his shares.

The stock market responded to the news with a shrug, as shares sank three cents to $12.64 during ordinary hours trading, and moved not at all in the aftermarket. That’s basically the same direction in which the shares have been moving for the past year now, with shares down a total of 29% over the last 12 months.

What does it mean to you?
Curiously, as Shiloh shares have continued to get cheaper, company insiders have continued to buy them. Curtis’s purchase was the second such insider buy in the past three months, and the tenth such insider purchase in the past year. During that latter time period, only one insider sale (for 500 shares) has been reported to the SEC. At the same time, insider purchases have totaled 36,023 shares.

And viewed one way, that only makes sense. At today’s price, Shiloh shares sell for just 10.8 times earnings. For a company that’s grown its gross profits at better than 40% annually over the past five years, that seems a cheap valuation.

Granted, the news isn’t all good. Free cash flow at Shiloh is currently negative for the trailing 12 months. But historically, this firm has produced strong cash profits in most years.

Could be, company insiders who are buying the stock expect to return to cash profitability. Could be… they expect to do that sooner than the market expects.

 

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