Insider Buying Metric Points to 5 Stocks Poised to Rise by Year’s End

As the second quarter earnings season is slowly coming to an end, blackout periods which restrict corporate insiders from trading securities are passing. In fact, corporate insiders have been piling up shares at a pace not seen for several weeks, which is great news for the investment community. Of course, the current level of insider buying does not match the levels witnessed in early 2016 amid the massive broader market sell-off, but it does inspire optimism.

But why would anyone bother to know how many shares corporate insiders are purchasing at any specific time? Peter Lynch, the well-known former manager of the Magellan Fund at Fidelity Investments once said that “Insiders might sell their shares for any number of reasons, but they buy them for only one: They think the price will rise.” Indeed, insider buying is usually perceived as a bullish signal, though investors monitoring insider trading metrics should keep in mind that insiders may be wrong on some occasions, just like anyone else. Without further ado, let’s have a look at a list of five companies that had insiders report stock purchases with the SEC on Friday.

Academic research has shown that certain insider purchases historically outperformed the market by an average of seven percentage points per year. This effect is more pronounced in small-cap stocks. Another exception is the small-cap stock picks of hedge funds. Our research has shown that imitating the 15 most popular small-cap stocks among hedge funds outperformed the market by nearly a percentage point per month between 1999 and 2012 (read more details here).

Casual-Dining Chain Board Member Buys Sizable Block of Shares Amid Stock Price Weakness

To begin with, Texas Roadhouse Inc. (NASDAQ:TXRH) had one member of its Board purchase a sizable block of shares this past week. Board member James R. Zarley bought a 23,800-share stake on Wednesday at a price tag of $42.23 each, a stake held entirely by the James R. Zarley Living Trust. Mr. Zarley also holds a direct ownership stake of 104,000 shares.

The casual-dining chain has seen its market cap jump by 26% since the beginning of the year despite experiencing a notable pullback in early-August after the company announced its financial results for the second quarter ended June 28. The company’s second quarter total revenue increased by 11.9% year-over-year to $508.81 million, reflecting a higher number of restaurants combined with comparable-restaurant sales growth of 4.5%. Texas Roadhouse Inc. (NASDAQ:TXRH), which operates 499 restaurants in 49 states and five foreign countries, is on track to open 30 company-owned restaurants in 2016, including seven Bubba’s 33 restaurants. The growing restaurant company opened 14 company-owned restaurants, including three Bubba’s 33 restaurants, in the first half of 2016. D.E. Shaw & Co. L.P., founded by David E. Shaw, was the owner of 436,569 shares of Texas Roadhouse Inc. (NASDAQ:TXRH) at the end of March.

The next two pages of this article will reveal four other companies where spur-of-the-moment insider buying recently took place.

Parent Company of Capital City Bank Witnesses Insider Buying

Capital City Bank Group Inc. (NASDAQ:CCBG) was yet another company that had a member of its Board of Directors purchase some shares last week. Allan G. Bense, Board member since April 2013, snapped up 10,000 shares on Wednesday at $13.76 apiece. Following the recent purchase, Mr. Bense currently owns 40,710 shares.

The Florida-headquartered financial holding company that serves as the parent of Capital City Bank has seen the value of its shares decline by 8% year-to-date. The bank offers a broad portfolio of products and services through 61 full-service offices located in Florida, Georgia, and Alabama. Capital City Bank Group Inc. (NASDAQ:CCBG)’s second quarter net income was $3.9 million, compared to $1.6 million posted for the first quarter of 2016 and $3.8 million posted for the second quarter of 2015. Although the low interest rate environment continues to put pressure on the company’s net interest income, Capital City Bank was successful in increasing the figure quarter-over-quarter due to growth in its loan and investment portfolios. Matthew Lindenbaum’s Basswood Capital had 189,362 shares of Capital City Bank Group Inc. (NASDAQ:CCBG) among its holdings on March 31.

Insider Buying Registered at Bank Holding Company

Hancock Holding Company (NASDAQ:HBHC) saw a highly-informed insider purchase some shares this past week. George A. Schloegel, former President and CEO of Hancock Bank of Louisiana, Hancock Bank of Florida, and Hancock Bank of Alabama, bought 4,633 shares on Thursday for $28.64 each, lifting his direct ownership stake to 539,253 shares. Some of these shares are held in an Individual Retirement Account and an Individual Investment Account. Mr. Schloegel, who currently serves as Advisory Director of Whitney Bank, also holds an indirect ownership stake of 11,429 shares through his 401(k).

The multi-faceted financial services company that offers a network of full-service financial choices through Hancock Bank locations in Mississippi, Alabama and Florida, and Whitney Bank offices in Louisiana and Texas has witnessed its market value increase by 19% since the start of the year. At the end of the March quarter, Hancock Holding Company (NASDAQ:HBHC) had loans to energy-related customers totaling $1.6 billion, which accounted for 10% of the company’s total loan portfolio. Approximately $1.00 billion of the energy portfolio was tied to customers who provide transportation and other onshore and offshore services and products to support exploration and production activities. Ken Fisher’s Fisher Asset Management upped its position in Hancock Holding Company (NASDAQ:HBHC) by 5% during the June quarter, to 522,612 shares.

The final page of this article will reveal two other companies where fresh insider buying was registered last week.

Director Piles Up Shares of Money Transfer Services Provider

A Board member at Moneygram International Inc. (NASDAQ:MGI) was buying shares of the company this past week. Michael P. Rafferty, appointed to the company’s Board of Directors in early March, snatched up 1,500 shares on Wednesday at a cost of $6.44 per share, which lifted his overall holding to 25,750 shares.

The shares of the world’s second-largest money transfer provider are 10% in the green year-to-date. The shares of Moneygram took a hit recently after the company lowered its revenue forecast for 2016. Moneygram International Inc. (NASDAQ:MGI) expects constant currency revenue growth in the range of 7%-to-9%, down from the previous forecast of 8%-to-10%. The global provider of money transfer services said that continued political and economic unrest in parts of the Middle East and Africa contributed to the company’s discouraging top-line guidance. Clint Carlson’s Carlson Capital owned a 3.56 million-share stake in Moneygram International Inc. (NASDAQ:MGI) at the end of March.

Arctic Cat Director Purchases Shares

Last but not least, one member of Arctic Cat Inc. (NASDAQ:ACAT)’s Board bought shares last week. Director Andrew S. Duff purchased 5,000 units of common stock on Wednesday at prices between $14.85 and $14.90 per unit. After the recent purchase, Mr. Duff currently owns 8,724 Arctic Cat shares.

The designer, engineer and manufacturer of snowmobiles and all-terrain vehicles, and recreational off-highway vehicles has been experiencing a challenging environment over the past several years. During its fiscal year 2016 ended March 31, Arctic Cat Inc. (NASDAQ:ACAT) faced a number of headwinds such as foreign currency headwinds, a lack of snowfall in key regions that put pressure on snow-related sales, as well as a weakening powersports market. The competitive retail environment also resulted in higher spending on promotional programs. Meanwhile, the company’s net sales for the first quarter of fiscal year 2017 ended June 30 were $104.9 million, down by 22.0% year-over-year. Jim Simons’ Renaissance Technologies LLC reported owning 111,796 shares of Arctic Cat Inc. (NASDAQ:ACAT) in its 13F filing for the March quarter.

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