Good morning. Today I am going to combine the weekly insider transaction list with other interesting opportunities I am seeing in the market. Given the volatility of small and microcap stocks, I am seeing more opportunities today than a few weeks ago. It only makes sense to highlight some ideas I am eying.
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Interesting Stock Ideas
We had a small insider buy from Culp Inc. (CULP). The stock is beaten down, eliminated their dividend and trading at a steep discount. The business model is isn’t great and doesn’t earn a great return on capital. And with higher inflation and lower demand the already poor profit margins have gotten squeezed. Despite the negatives, the stock is in value territory and the small insider buy from a director is a positive step.
First Northwest Bancorp (FNWB) had an insider buy from the CEO who purchased 2,000 shares. The bank is the typical mutual conversion. Post-conversion they have bought back almost 1 million shares and pay a consistent dividend. However, it appears as if a sale of the bank is not on the horizon. The management team has lead a number of initiatives outside of the traditional banking space. One was the failed Quin joint venture, a financial technology company. The bank also has a 33% interest in a Portland, Oregon investment banking company. See the investor presentation for more details. Despite this not being the traditional route of a mutual conversion, from conversion to sale to a larger competitor, the bank is trading significantly under book value, is generating cash and has a P/E ratio of only 8.6x. The stock is down 36% over the past year and could be worth digging into.
There has been a decent amount of insider buys from iHeartMedia (IHRT). One was from the Chief Accounting Officer, a huge buy from the President, CFO and COO, and another large buy from the Chairman and CEO. The stock dived 30% after giving bad guidance after Q4 results and JP Morgan cut the knife deeper by cutting their internal price target on the company. The insider buys were after the larger price drop, which shows management has confidence in the company.
Here’s a really interesting one and could get some torque to the upside should continued buzz occur around artificial intelligence. Meet Amesite Inc. (AMST). The company has a market cap of $8 million with $7 million of cash on the balance sheet and no debt. The company claims to be an artificial intelligence driven platform and course designer for online products, schools and businesses. The company is not profitable and in their recent investor presentation they have 18 months left before they need to raise additional capital. I don’t really understand what service they offer and the equity is probably a dud. But it could be worth your time to keep an eye on it. There was a small insider buy from the CEO too.
There continues to be insider buying at Juniata Valley Bank (JUVF) and Orrstown Financial Services (ORRF). I have highlighted these two banks in prior articles so please see that writeup for additional color.
I highlighted NGL Energy Energy Partners (NGL) in an insider buying article on February 16th after the CEO bought 50,000 shares in the open market. Since then the stock has went from $2.77 to $3.77 and just three days ago they announced a sale of their marine assets for $112 million. The company guided to $20-100 million in asset sales so this is a nice cash injection. Debt is at $2.8 billion and they guided to $630 million of EBITDA putting them at 4.46x, below their 4.75x leverage target. If they continue to take leverage targets down they might be able to refinance.
Franklin Street Properties (FSP) is down 64% over the past year and was recently announced to be kicked out of the S&P 600 Small Cap Index. They will officially be kicked out March 20th and will likely experience increased volume and downward pressure and index funds will be forced to sell the stock. The company owns and operates office properties and is trading significantly below book value at 0.29x book. The market cap is $224 million with $8 million in cash and $413 million of debt. Trailing 12 months EBITDA is $58 million. The company has sold assets in the past and they intend to continue to sell assets, pay down debt and return capital to shareholders.
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