Investors Should Look For Clues in Insider Buying; 3 Companies with Eye-Catching Purchases

JAKKS Pacific Inc. (NASDAQ:JAKK) witnessed a group of corporate insiders buy shares in the past several days, which is the type of insider buying investors should pay close attention to. To start with, Director Michael S. Sitrick snapped up 35,000 shares on Friday at a cost of $6.75 per share and lifted his overall holding to 62,313 shares. Chief Executive Officer, President and Secretary Stephen G. Berman purchased 5,000 shares on Monday at $6.94 apiece and currently owns 621,317 shares. Last but not least, Rex H. Poulsen, another member of the company’s Board of Directors, bought 10,000 units of common stock on Friday for $6.87 each, boosting his stake to 59,686 shares.

The producer and marketer of children’s toys and other consumer products has seen its shares decline 6% since the beginning of 2016, following a terrible performance in the second half of 2015. The company’s net sales in 2015 were $745.74 million, down from $810.06 million reported for the previous year. However, the revenue decline was in line with the company’s guidance, reflecting the “stellar performance” of one of its key product lines in 2014. JAKKS Pacific’s 2015 net income increased to $23.17 million from $21.51 million. Looking ahead, the company anticipates its 2016 net sales to grow roughly 7.0% year-on-year and diluted earnings per share to increase 10.0%. However, investors should expect a net loss in the range of $0.90 to $1.00 per diluted share for the first quarter of 2016, mainly due to higher marketing expenses in 2016, as well as the effect of Easter falling in the first quarter. More importantly, even though the company’s management plans to step up marketing investment in 2016, it still anticipates to deliver adjusted EBITDA growth of 28.0%. Jim Simons’ Renaissance Technologies reported owning 1.82 million shares of JAKKS Pacific Inc. (NASDAQ:JAKK) in its 13F filing for the December quarter.

It appears that the SEC has been receiving Form 4 filings from energy companies’ insiders on a daily basis for quite some time, so let’s take a brief look at the recent insider buying at Dynegy Inc. (NYSE:DYN). President and Chief Executive Officer Robert C. Flexon acquired 10,000 shares on Tuesday at a price of $10.08 per share and lifted his stake to 436,763 shares.

The shares of the power producer have plummeted by 61% over the past 52 weeks. The company’s business involves the production and sale of electric energy, capacity and ancillary services from its fleet of 35 power plants that yield approximately 26,000MW of generating capacity. On February 25, Dynegy announced the acquisition of certain power generation facilities from International Power S.A., a subsidiary of French power utility ENGIE, through a joint venture with private-equity firm Energy Capital Partners. The $3.3 billion acquisition is anticipated to close in the fourth quarter of 2016. A subsidiary of Dynegy will own 65% of the joint venture, called Atlas Power, while 35% will be owned by affiliates of ECP. Although some analysts considered this deal quite surprising given the company’s disappointing stock performance and weak balance sheet, most of them saluted the recently-inked deal. There were 36 smart money investors from our system invested in the company at the end of the December quarter, aggregately amassing nearly 46% of its outstanding common stock. Howard Marks’ Oaktree Capital Management held its position in Dynegy Inc. (NYSE:DYN) unchanged during the October-to-December period at 9.84 million shares.

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