Struggling Monsanto (MON) Among Three Companies With Noteworthy Insider Buying

Insider Buying Seen at Monsanto For the First Time in More Than 5 Years

Monsanto Company (NYSE:MON) had not witnessed any insider buying activity since the end of 2010 until last week. Director Charles S. McMillan purchased 3,500 shares last Tuesday at prices that ranged from $87.10 to $87.35 per share, lifting his overall holding to 58,440 shares. The last time Mr. McMillan bought shares was exactly six years ago, when he purchased 2,000 units of common stock for $67.26 each. The shares of the provider of agricultural products have declined by 24% in the past 12 months, which probably serves as the primary reason behind Mr. McMillan’s recent purchase.

Monsanto Company markets seeds, biotechnology trait products, herbicides and digital agriculture tools that allow farmers to improve productivity and reduce the costs of farming. Monsanto conducts its business operations through two segments: Seed and Genomics; and Agricultural Productivity. The Seeds and Genomics segment includes the global seed and other related traits businesses, biotechnology platforms, and digital agriculture. Through the Agricultural Productivity segment, Monsanto manufactures Roundup and Harness brand herbicides, as well as other herbicides. The company’s net sales for the first half of fiscal year 2016 that ended February 29 totaled $6.75 billion, a 16% year-over-year decline. The decrease was mainly driven by weaker demand in the agricultural productivity segment, as well as in corn and soybean seed and traits. The decrease in agricultural productivity was attributable to lower volume of sales and lower average net selling price of Roundup and other glyphosate-based herbicides. The aforementioned two segments were also severely impacted by foreign currency headwinds, especially in Brazil. Net income for the first half of fiscal year 2016 was $1.80 per share, down from $3.41 per share in the first half of fiscal year 2015.

Some analysts believe that most market participants and investors are focused too much on Monsanto’s short-term challenges, which include falling crop prices, competitor discounting, devaluations of certain currencies and depressed glyphosate prices. However, the company’s growth is anticipated to speed up in the foreseeable future should crop prices, global currencies, and glyphosate pricing stabilize.

Shares of Monsanto currently change hands at around 16.2-times expected earnings, below the forward P/E multiple of 18.5 for the S&P 500 Index and the ratio of 20.1 for competitor Syngenta AG (ADR) (NYSE:SYT). The hedge fund sentiment towards Monsanto Company declined significantly during the December quarter, as the number of funds with stakes in the company dropped to 38 from 60 quarter-over-quarter. Murray Stahl’s Horizon Asset Management owns 12,324 shares of Monsanto Company (NYSE:MON) as of March 31.

Disclosure: None