Tracking insider purchases is very important to our investment strategy (just as much as hedge fund moves). Consequently, in this article, I will examine two companies in the beverage business, which have witnessed multiple insider purchases over the past few weeks.
First off is The Coca-Cola Company (NYSE:KO), a $167 billion market cap worldwide company that needs no introduction whatsoever. Over the past couple of weeks, insiders have been chug-a-lugging this stock.
– The first acquisition was registered on Feb. 24th, when Ana Botin, Board Director, started a position in the stock with 2,500 shares of the company. She paid $37.25 per share on that date.
– Also on Feb. 24th, Elena Maria Lagomasino, Board Director, purchased 7,981 shares of the company for $37.57 per share. She now owns 23,631 shares of the company, worth more than $897,000.
– A day later, Muhtar Ahmet Kent, Chairman and CEO, increased his stakes at The Coca-Cola Company (NYSE:KO) as well. He bought 10,500 shares of the company for $37.91 each. Following this transaction, Mr. Muhtar holds 262,118 shares of the company, valued at more than $9.95 million.
– On Feb. 27th, Richard Daley, Board Director, also procured 1,500 shares of the company and now holds 5,500 of them.
– Finally, on March 11th, Alexander J Douglas Jr., Senior Vice President, acquired 2,585 shares for $38.76 each. He now owns 135,972 shares of the company.
Despite the bullishness seen here, I should highlight that all of these purchases took place amidst a low-price season. All of the trades were completed at prices closer to the lower end of the 52-week range, than to the higher end ($36.83 and $43.43, respectively). Most of them are just taking advantage of an attractive entry point. However, a moated business, above average margins and returns, one of the strongest brand names on Earth, a 3.17% dividend yield, decent long-term growth projections and a reasonable valuation make of this stock a catch, in my view. Just like insiders, analysts expect the stock price to rise substantially over the next several months. A mean price target of $43.83 per share implies a considerable upside potential from the current price of $37.97 per share.
In addition to insiders and analysts, hedge funds also seem to like this stock. I would particularly like to emphasize Mr. Warren Buffett´s $15.1 billion stake in the company (400 million shares), and Donald Yacktman´s ownership of 43 million shares (worth $1.64 billion), a position that increased by 9% in his fund´s last 13F filing.
The second case I would like to observe is that of Keurig Green Mountain Inc (NASDAQ:GMCR). Formerly known as Green Mountain Coffee Roasters, Inc., this company is a $15.8 billion market cap specialty coffee and coffeemaker businesses in the United States and Canada; one of Starbucks Corporation (NASDAQ:SBUX)´s main competitors. The firm has displayed aggressive growth over the past few years (over the last 3, revenue rose, in average, by 47.6% each year; net income grew by an average of 82.5%).
Over the past two weeks, the company witnessed several insider purchases on the hands of two Board Directors:
David D A Mackay made two purchases on Feb. 27th, adding 2,000 shares to his direct holdings and another 2,000 to his indirect holdings (thorugh Trust FBO Reporting Person’s Children). On March 7th, he once again added this stock to his portfolio, buying another 2,000 shares for his direct holdings and an extra 2,000 for his indirect ones. He now owns more than 54,000 shares of the company, worth more than $5.7 million.
The other insider active in the past few weeks was Norman Wesley who, through three separate transactions, added 9,000 shares of the company to his holdings, having paid prices ranging from $105.07 to $105.09 per share. He currently holds more than 31,000 shares of Keurig Green Mountain Inc (NASDAQ:GMCR).
With plenty of upside potential, not only insiders are betting in this stock. For instance, Jeffrey Tannenbaum’s Fir Tree recently upped its stakes in the company by 627%, to become the second largest hedge-fund stockholder, with 2.2 million shares, worth more than $233 million.
Disclosure: Javier Hasse holds no position in any stocks mentioned