Since earnings are updated only once a quarter, the most dynamic changes in companies -- other than stock prices -- are insider activities. This may not seem as important for big companies like Apple (AAPL) or Microsoft (MSFT), which have plenty of following by analysts, journalists, and bloggers.
For small-cap companies (market cap < $2 billion), however, such information can be quite useful. It gives us a short list to further investigate whether a company is investment worthy. After all, insiders do know a lot more about their companies.
Below is a list of notable insider purchases of small-cap stocks filed at the Securities and Exchange Commission today. Following Seeking Alpha's small-cap policy, all the stocks in the table are greater than $1 per share or $100 million market cap. I have filtered out those transactions with a total value of less than $10,000.
On today's list two companies, Pacific Sun (PSUN) and Texas Industries (TXI), have huge piles of short selling shares. Both can potentially create sizable short squeezes that are potentially very profitable for traders.
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Bancorp Of New Jersey, Inc. (BKJ) is a savings & loans company. It has a market cap of $49.50 million. The company pays a dividend of 2.50%. According to today's SEC filing, Bancorp Of New Jersey has two insiders who purchased a total of 1,400 shares at a total value of $13,364. Multiple insider purchase occasions are usually a positive sign. It has a reasonable P/E ratio of 13.81. Its profit margin was 24.85% over the past year. I like Bancorp Of New Jersey's operating margin of 42.55%, a good sign for the company's financial health. Both its revenue and earnings grew in double digits over the latest quarter, by 14.50% and 40.60%, respectively. The company has $23.29 million cash on its balance sheet and no debt.
Snyder's-Lance (LNCE) is a processed and packaged goods company. It has a market cap of $1.665 billion. The company pays a dividend of 2.60%. According to today's SEC filing, Snyder's-Lance has one insider who purchased a total of 7,049 shares at a total value of $164,241. The current price is fairly close to its 52-week high. Its P/E ratio of 40.02 is on the expensive side. Investors should use some cautious because of this valuation. Its high PEG ratio suggests that the market expectation may be too high to become reality. Snyder's-Lance has an enterprise value / EBITDA ratio of 12.88. Snyder's-Lance has a relatively low operating margin of 5.72%. Its revenue grew by 1.10% and its net income improved by 31.00% during the most recent quarter. Over the past 10 days, Snyder's-Lance has seen significantly higher than average trading volume. This month, 2.29 million shares are being shorted. Comparing to 2.48 million shares shorted over the previous month, the shared short has decreased by 7%. The short ratio of Snyder's-Lance is 8.60, accounting for 4.70% of floating shares.
Pacific Sunwear of California (PSUN) is a apparel stores company. It has a market cap of $106.30 million. According to today's SEC filing, Pacific Sunwear of California has one insider who purchased a total of 30,000 shares at a total value of $45,153. One concern is the company isn't profitable at this point. The company had a net income of $-77.59 million, EBITDA of $-20.61, and gross profit of $180.79 million on a revenue of $835.69 million. The company has $21.59 million cash on its balance sheet. Its debt burden is $74.18 million. Over the past 10 days, Pacific Sunwear of California has seen significantly higher than average trading volume. This month, 8.20 million shares are being shorted. The short ratio of Pacific Sunwear of California is 16.50, accounting for 21.60% of floating shares. This company is on the brink of bankruptcy. Of course, if a turnaround does happen, it can be quite profitable.
Texas Industries (TXI) is an cement company. It has a market cap of $1.018 billion. The company pays a dividend of 0.80%. According to today's SEC filing, Texas Industries has one insider who purchased a total of 16,539 shares at a total value of $573,870. The company isn't profitable at this point. The company had a net loss $61.79 million and EBITDA of $12.00 on a revenue of $648.21 million. Its revenue grew by 7.00% during the most recent quarter. The company has $27.16 million cash on its balance sheet. Its debt burden is $654.50 million. It has bankruptcy risk. The trading volume is relatively normal. The company's shares are heavily shorted (4.62 million shares). The short ratio of Texas Industries is 20.10, accounting for 32.10% of floating shares.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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