Actions speak louder than words, as the saying goes. And when it comes to insiders, that certainly seems to be the case. If we track informative insider transactions, we can get a good idea of the stocks that insiders see as compelling investing opportunities right now as well as the stocks insiders are less convinced about. This matters because insiders have access to a wealth of company information and insights. As a result, the timing of these transactions can provide a critical insight into how these insiders see the company performing.
Here we use TipRanks' Daily Insider Transactions to dive into some of the latest big insider spending. You can filter the options to delve into a specific sector, and limit the results to only transactions from top-performing corporate insiders. Here we screened for stocks with transactions of over $500,000.
One of the largest U.S. insurance companies, UnitedHealth has put on a solid stock performance recently. Shares have soared 8% since the start of the year, and are up on a 3-month, 6-month and 1-year basis. Indeed in the last three years, (UNH) - Get Report has spiked 140% to its current share price of $268.
Could this stock performance be the catalyst for an avalanche of insider selling? Do investors want to take advantage of the current share price as an opportunity for some well-timed profit taking? In the last three months insiders have sold over $11.5 million of UNH stock. One director in particular, Richard Burke, has sold off $7 million-worth of UNH shares in two separate transactions- the most recent sale taking place just a few days ago, on January 24.
Interestingly, however, this is a stock which still boasts a very bullish Street sentiment. UNH has a 'Strong Buy' Street consensus with a $308 average analyst price target (15% upside potential). In fact, 13 analysts have published back-to-back buy ratings on UNH in the last three months. Most notably, both Oppenheimer's Michael Wiederhorn and Cantor Fitzgerald's Steven Halper single the stock out for praise.
For example, Wiederhorn picks UNH has as his number 1 stock idea. In the firm's Dec-Jan report, he singles out UNH as the stock in his coverage most likely to outperform over the next 12 months.
"We believe UNH is well positioned by virtue of its diversification, strong track record, elite management team and exposure to certain higher growth businesses" he explains. Plus the company's Optum business is a nice complement to its core managed care operations and continues to account for a large share of earnings.
Meanwhile Halpern tells investors "we continue to believe UNH shares are an optimal holding for large-cap growth managers." He reiterated his bullish $310 price target following the company's solid 4Q18 earnings results.
"We continue to believe the company is executing on its integrated business model, which utilizes technology to optimize care delivery and management" he writes.
Not that Richard Burke will miss out too much. The UNH director still has over $473 million in UNH stock.
GTT Communications is a multinational telecommunications and internet provider company based in Virginia. And in the last two weeks, one of the company's owners -- Spruce House Partnership LP -- has snapped up more than $33 million of (GTT) - Get Report stock (spread across two transactions).
In fact, over the last three months, insiders have poured a total of $47.08 million into the stock. What's also worth noting is that Spruce House Partnership has a strong track record with its insider investments. It is currently tracking a 61% success rate and 17% average return per transaction.
So what does the Street have to say about the company's latest investment in GTT? Luckily for Spruce House, the Street sees GTT stock continuing to outperform.
With a 'Strong Buy' Street consensus, on average analysts are modelling for prices to surge by over 50%. That's after the stock has already put on a 25% sprint so far in 2019. However, on a one-year basis, the stock is trading down 37%, so at this point Spruce is still buying on the dip so to speak.
Oppenheimer's Timothy Horan is certainly upbeat about the stock's long-term potential. "We believe GTT's unique focus allows it to find highly accretive acquisitions that are ignored by other market participants, allowing it to extend its network and services, setting it up for strong FCF growth" he writes.
Indeed, GTT has just set impressive new targets of $3B in revenue, $900M in EBITDA and at least $5/share of FCF within three years.
And good news for shareholders, Horan has a $50 price target on GTT for a whopping 70% upside potential! The five-star analyst believes the key for GTT is integrating Interoute, realizing synergies and deleveraging its balance sheet.
Did a disappointing earnings report spook insiders? That's certainly how it appears. Morgan Stanley reported 4Q18 EPS of $0.80 versus consensus of $0.89. The results included a $0.07 tax benefit, and so the core EPS print of $0.73 missed by even a bit more than the headline number.
Following the report, corporate insiders offloaded almost $33 million worth of stock in the financial giant. On January 23 one of Morgan Stanley's owners, Mitsubishi UFJ Financial Group, sold $32.2 million of (MS) - Get Report stock. This left the bank with $17.7 billion worth of shares in Morgan Stanley.
At the same time, the company's chief human resources officer, Jeffrey Brodsky, sold $675,000 of MS stock, leaving him with $5 million of stock. These are the only two informative insider transactions for Morgan Stanley in the last three months.
Nonetheless, Oppenheimer's Chris Kotowski advises steering clear of the panic button. Instead you can use weakness to add to positions. He is sticking to his MS buy rating and $53 price target.
The company has vastly de-risked its balance sheet and is driving the majority of earnings from less capital-intensive, more stable businesses says the analyst. "While there is still some volatility on a quarterly basis as this print showed, we stand by that conclusion" Kotowski write post-earnings report.
"To us, the shares are really attractive at 1.15x TBV and 8.7x our 2019 earnings estimate. While the quarter was a miss, the full-year result remained very solid, and the weakness in the quarter can be reasonably explained. Most of it came from a shortfall in FICC trading in a very volatile quarter plus incremental deferred comp accruals" he told investors.
Overall this is a company with a cautiously optimistic 'Moderate Buy' Street consensus. The $51 average analyst price target indicates 20% upside potential from current levels.
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. Author: Harriet Lefton.