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What Can Investors Learn From These Companies’ Insider Buying Activity?

William Lyon Homes (NYSE:WLH) is another company that witnessed unusual insider trading activity last week. Executive Chairman General William Lyon snapped up 33,000 shares on Friday at a weighted average price of $15.40, lifting his overall holding to 58,009 shares. The shares of this regional homebuilder are 24% in the red year-to-date and are trading at a very appealing trailing price-to-earnings ratio of 11.45, which is significantly below the average of 22.73 for the companies included in the S&P 500 Index. The housing market in the U.S. has been continuously strengthening since the aftermath of the financial crisis of 2008. Many markets across the U.S. have witnessed strong economic growth, positive demographic trends and decreasing mortgage rates in recent years. Meanwhile, the company reported revenues from homes sales of $681.8 million for the nine months that ended September 30, which marked an increase of 35% year-on-year. William Lyon Homes also registered new home orders of 2,059 homes for the first nine months of 2015, up from 1,210 reported a year ago. Nonetheless, the company had a backlog of 1,032 homes sold, but not closed on September 30, marking a 42% increase in units as compared to the backlog registered on September 30, 2014. The number of smart money investors with positions in the regional homebuilders increased to 21 from 14 during the September quarter. Billionaire John Paulson of Paulson & Co. holds a 3.32 million-share stake in William Lyon Homes (NYSE:WLH) as of September 30.

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Let’s wrap up our discussion by analyzing the insider buying activity at Plains All American Pipeline L.P. (NYSE:PAA). Executive Vice President Phillip D. Kramer purchased 25,000 shares on Monday at prices in the range of $18.80-to-$19.22 per share and currently holds 373,624 shares. The owner and operator of midstream energy infrastructure and provider of logistics services for crude oil, natural gas liquids, natural gas and refined products has seen its shares decline 62% in 2015. The company generated net income of $657 million for the nine months that ended September 30, down from $994 million reported for the same period in 2014. The decrease was mainly attributable to the disappointing results generated from the company’s Supply and Logistics segment, which was impacted by depressed differentials from the transitioning crude oil market and higher competition. The company’s financial results were also impacted by costs and revenue losses in connection with a crude oil release from its Las Flores to Gaviota Pipeline (Line 901) in California. Meanwhile, the company has a cheap valuation at the moment if solely looking at its trailing and forward P/E ratios. The stock is trading at a trailing P/E ratio of 15.78 and a forward P/E ratio of 10.32, which is below the average of 17.35 for the S&P 500 benchmark. Jim Simons’ Renaissance Technologies holds a 728,914-share position in Plains All American Pipeline L.P. (NYSE:PAA) as of the end of the third quarter.

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Disclosure: None

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