An Insider Bought John Wiley

According to a filing with the SEC, Bradford Wiley II, who serves on the Board of Directors at John Wiley & Sons Inc (NYSE:JW.A), bought 12,000 shares of stock on December 18^th at an average price of $37.15 per share. We like to track insider purchases because the benefits of diversification suggest that insiders should avoid buying their company’s stock; if they are buying anyway, it is at least somewhat likely that they are very confident in the company’s prospects. In fact, studies show that on average- though not always- stocks bought by insiders beat the market (learn more about studies on insider trading). Wiley now owns about 87,000 shares in the publishing company directly, and a related LLC owns over 8 million shares. See more about Wiley’s insider trading activity.

Wiley’s second fiscal quarter ended in October, with the company seeing a slight decline in revenue compared to the same period in the previous fiscal year. Operating costs were about the same if we strip out the effects of an impairment to consumer publishing and gains realized by the company on selling its travel publishing unit. This resulted in a 15% decrease in net income, which was actually an improvement from the results in the first quarter.

At a market capitalization of $2.3 billion, John Wiley & Sons Inc trades at 12 times trailing earnings. That’s a fairly low earnings multiple, but as we’ve seen the company has experienced declines in net income and we don’t feel very optimistic about the publishing business. Wall Street analysts expect the company to do better on the bottom line in the next fiscal year, and so the forward P/E is 11. If Wiley can achieve even modest earnings growth, it could prove undervalued, but we are skeptical.

Renaissance Technologies, founded by billionaire Jim Simons, had a small position in John Wiley & Sons Inc at the end of the third quarter (find Renaissance’s favorite stocks). The largest position which appeared in our database of 13F filings belonged to Dreman Value Management; the fund, which is managed by David Dreman, owned about 350,000 shares (check out Dreman’s favorite stocks). Billionaire Steve Cohen’s SAC Capital Advisors closed its position in Wiley between July and September (see what stocks Cohen was buying instead).