Bassett Furniture Has Two Top-Tier Insiders Purchase Shares, Plus 2 Other Companies with Fresh Insider Buying

It is already common knowledge that corporate insiders are savvy long-term-oriented investors, as their purchases tend to beat broader market benchmarks on aggregate. Past research also indicates that uninformed outsiders can also earn strong returns by imitating insiders’ moves. Insider Monkey is a strong believer of the so-called insider trading anomaly and believes that investors would be wise to keep track of insider trading activity.

It is also believed that the trading behavior of those insiders who are more knowledgeable about the overall affairs of their firms, such as the chairman and other top-tier executives of companies, is an even more successful predictor of future stock performance. Numerous investors tend to focus on the insider trading activity registered at companies in the small- and mid-cap space, as these companies do not receive the same wealth of analyst coverage that large-cap companies such as Apple Inc. (NASDAQ:AAPL) do. Insider Monkey processed the relatively small number of Form 4 filings submitted with the SEC on Tuesday and pinned down three small-cap companies with noteworthy insider buying activity.

Through extensive research, we have determined that the due diligence that the investors in our database employ, as well as their long-term focus makes them perfect targets to emulate. However, the results of our analysis have also shown that the small-cap picks of these funds can generate much better returns, with the 15 most popular small-cap stocks beating the market by an average of 95 basis points per month (read more details here).

Retailer of Home Furnishings Registers Insider Buying Amid Stock Weakness

Bassett Furniture Industries Inc. (NASDAQ:BSET) recently registered the first insider buying at the firm in 2016, with two of its most informed insiders purchasing shares this past week. To start with, Chairman Emeritus Paul Fulton purchased 2,000 shares on Thursday at a weighted average cost of $23.96 per share, lifting his overall holding to 62,589 shares. More importantly, President and CEO Robert H. Spilman Jr. snatched up 4,000 shares on the same day at $23.64 apiece. After the recent purchase, Mr. Spilman currently holds a direct ownership stake of 185,513 shares.

The recent insider buying comes shortly after the retailer, manufacturer and marketer of branded home furnishings released its financial results for the second quarter of fiscal year 2016 ended May 28. Bassett Furniture Industries Inc. (NASDAQ:BSET)’s consolidated sales for the quarter dropped by 4.4% year-over-year to $106.7 million, only its second decline in quarterly revenue in four years. The company’s comparable store sales decreased by 3.6% year-over-year, with its 12 Texas stores accounting for more than two-thirds of the decrease. The company’s Bassett Home Furnishings store network comprises 58 company-owned stores and 32 licensee-owned stores, after Bassett Furniture Industries closed three underperforming stores during the first half of 2016. The retailer opened a new store during the second quarter and anticipates opening another one by the end of the year.

There were 11 hedge fund vehicles followed by Insider Monkey which were invested in the retailer of home furnishings at the end of March, amassing nearly 18% of the company’s outstanding common stock. Bassett’s shares are down by almost 3% thus far in 2016, mainly due to a 15% drop in the past month. Royce & Associates, founded by Chuck Royce, was the owner of 493,900 shares of Bassett Furniture Industries Inc. (NASDAQ:BSET) at the end of the first quarter.

The next page of this article will disclose the insider buying activity registered at two other companies.

Executive of Individual Annuities Seller Buys Some Shares

American Equity Investment Life Holding (NYSE:AEL) also had a member of its executive team buy some shares this past week. Ronald J. Grensteiner, President of American Equity Investment Life Insurance Company and Executive Vice President, bought 1,770 shares on Thursday at prices ranging from $14.08 to $14.09 per share. Mr. Grensteiner currently holds an ownership stake of 84,249 shares.

The seller of individual annuities and life insurance policies has lost 43% of its market value since the beginning of 2016, reflecting the energy market slump, new regulation from the U.S. Department of Labor, and the United Kingdom’s historic and irreversible decision to leave the European Union. Earlier this year, the DOL announced rules under which fixed indexed annuity products and variable annuity products will be subject to the best interest contract exemption, implying stricter standards for the sale of fixed-indexed annuities. The depressed energy industry put pressure on the value of some bond holdings, whereas the so-called Brexit pushed down yields. American Equity Investment Life Holding (NYSE:AEL) recorded $1.69 billion of fixed-indexed annuity sales for the first quarter, up from $1.23 billion reported a year earlier.

The number of asset managers tracked in our system that were invested in American Equity climbed to 21 from 19 during the first three months of 2016, whereas the overall value of those managers’ equity investments in the company shrank to $104.41 million from $201.21 million quarter-over-quarter. The 21 money managers hoarded nearly 8% of the company’s outstanding shares. Richard S. Pzena’s Pzena Investment Management acquired a new stake of 590,141 shares of American Equity Investment Life Holding (NYSE:AEL) during the March quarter.

Supplier of Electronic Scoreboards Sees Insiders Pile Up Shares

Daktronics Inc. (NASDAQ:DAKT) has witnessed increased insider buying over the past several weeks. Board member Kevin Patrick McDermott snapped up 2,000 shares on Monday for $6.10 each, boosting his overall holding to 13,121 shares. President and CEO Reece A. Kurtenbach purchased two blocks of 5,000 shares each last Tuesday at a weighted average price of $6.20 per share. Following the not-so-distant purchases, Mr. Kurtenbach currently holds a direct ownership stake of 263,958 shares.

The supplier of electronic scoreboards, large electronic display systems, digital messaging solutions, and software and services has seen its market capitalization plunge by 27% since the start of 2016. Daktronics Inc. (NASDAQ:DAKT)’s scoreboards and stadium displays sport strong margins, but they aren’t replaced too often. As a result, the company’s net sales and profitability have fluctuated significantly due to the impact of large project orders, including display systems for professional sports facilities, colleges and universities, as well as other projects in the commercial arena. The company reported net sales of $570.17 million for fiscal year 2016 ended April 30, compared to $615.94 million for fiscal year 2015 and $551.97 million for fiscal year 2014. To the disappointment of investors, Daktronics posted net income of only $2.06 million for fiscal year 2016, down from $20.88 million recorded in fiscal year 2015 and $22.21 million in fiscal year 2014.

There were a mere six money managers in our database that were invested in Daktronics at the end of the first quarter, down by one quarter-over-quarter. Ken Griffin’s Citadel Advisors LLC had 47,218 shares of Daktronics Inc. (NASDAQ:DAKT) in its portfolio at the end of March.

Disclosure: None