Massive Clusters of Insider Buying at United Continental Holdings Inc. (UAL) and Two Other Companies

Insider buying activity has been gaining steam in the past several days, which may point to attractive investment opportunities. As a general rule, heavy insider buying is interpreted as a bullish signal by most stock market participants because there is only one reason corporate insiders are buying shares in their own companies. Unlike many indicators based on historical data, insider buying usually serves as a forward-looking indicator. Directors and executives have up-to-date information about pretty much all factors that affect their companies’ future outlook, which makes us believe that they have a competitive edge over non-insiders when trading securities. Most of the time, insider purchases show that corporate insiders believe their company is worthy much more than the price tag offered by Mr. Market and they tend to be accurate on most occasions. Insider Monkey processed the majority of Form 4 filings submitted with the SEC on Wednesday and pinned down three companies with noteworthy insider buying.

Academic research has shown that certain insider purchases historically outperformed the market by an average of seven percentage points per year. This effect is more pronounced in small-cap stocks. Another exception is the small-cap stock picks of hedge funds. Our research has shown that imitating the 15 most popular small-cap stocks among hedge funds outperformed the market by nearly a percentage point per month between 1999 and 2012 (read more details here).

This Struggling Airline Had Seven Different Insiders Purchase Stock This Week

After United Continental Holdings Inc. (NYSE:UAL)’s Chief Executive Officer and President Oscar Munoz purchased $1 million worth of stock on Friday, seven different Board members and executives followed suit. To begin with, Chief Operations Officer and Executive Vice President Gregory L. Hart bought 2,000 shares on Tuesday for $49.90 each, boosting his overall holding to 36,466 shares. Director James A. C. Kennedy also snapped up 2,000 shares on the same day at $49.90 apiece, lifting his ownership to 2,900 shares. Moreover, freshly-appointed Non-Executive Chairman Robert A. Milton purchased a new stake of 1,000 shares on Tuesday at a price of $49.14 per share. Gerald Laderman, Acting Chief Financial Officer and Senior Vice President of Finance, acquired 5,000 shares on Wednesday at prices that ranged from $48.73 to $48.80 per share, which lifted his stake to 40,774 shares. James M. Whitehurst, another freshly-appointed Board member, purchased a 10,000-share stake on Wednesday at a price tag of $49.23 per share. Michael P. Bonds, Executive Vice President of Human Resources and Labor Relations, purchased 2,000 units of common stock on Monday at a cost of $48.38 per unit, after which Mr. Bonds currently owns 52,865 units. Last but not least, Executive Vice President and General Counsel Brett J. Hart bought 5,000 shares on Monday at prices varying from $49.07 to $49.10 per share, which increased his holding to 59,579 shares.

The shares of the carrier have plummeted 13% over the past five trading sessions, after the company provided weaker-than-expected outlook for passenger revenue per available seat mile (PRASM) for the current quarter. The stock is down 14% year-to-date and trades at a forward P/E multiple of only 5.7, which is significantly below the ratio of 17.8 for the S&P 500 Index. The PRASM figure is anticipated to decline in the range of 6.5%-to-8.5% during the current quarter, after dropping 7.4% in the first quarter. The airline’s CEO urged for “a little more patience” during the earnings call, saying that “we have a couple of new board members – I will lean hard on them”. Therefore, the massive insider buying at the company appears to suggest that Board members and executives are indeed prepared for United Continental’s turnaround. David Keidan’s Buckingham Capital Management owns 45,345 shares of After United Continental Holdings Inc. (NYSE:UAL) as of March 31.

Let’s head to the next pages of this article, where we will discuss the insider buying at Acacia Research Corp (NASDAQ:ACTG) and Peapack-Gladstone Financial Corp (NASDAQ:PGC).

CEO and New Director at Acacia Research Purchased Shares This Week

Acacia Research Corp (NASDAQ:ACTG) had two corporate insiders buy shares earlier this week, including its most influential executive. Chief Executive Officer Marvin E. Key purchased 55,000 shares on Monday at a price of $4.15 per share, boosting his ownership to 190,833 shares. Freshly-appointed Director, Frank E. Walsh III, acquired a new stake of 35,000 units of common stock on Monday at a price tag of $4.13 per unit.

In early March of this year, the company received a proposal from ARC Acquisition Company LLC to purchase all Acacia’s outstanding shares for $3.72 per share in cash, but the Board determined that the proposal was inadequate. Shares of Acacia have gained 22% in the past three months and are currently trading notably above the $3.72-offer, but they continue to trade significantly below the 52-week high of $11.34 reached at the end of April 2015. Acacia Research, which invests in, licenses and enforces patented technologies, generated revenue of $24.72 million in the first quarter of 2016, down from $34.21 million in the same period of 2015. First-quarter non-GAAP net income was $2.53 million, as compared to $3.16 million reported for the first quarter of 2015.

There were 12 hedge funds tracked by Insider Monkey with stakes in Acacia Research at the end of 2015, which amassed nearly 16% of the company’s outstanding shares. John W. Rogers’ Ariel Investments had 3.58 million shares of Acacia Research Corp (NASDAQ:ACTG) in its equity portfolio at the end of December.

Four Different Insiders at Peapack-Gladstone Bank Bought Shares This Week

Peapack-Gladstone Financial Corp (NASDAQ:PGC) registered a cluster of insider buying this week, which involved four different insiders. To start with, Eric H. Waser, Executive Vice President and Head of Commercial Banking, bought 100 shares on Monday for $18.57 each and 900 shares on Wednesday at $19.75 apiece, boosting his holding to 27,207 shares. Chairman F. Duffield Meyercord acquired 10,000 shares on Tuesday at a price of $19.50 per share, which increased his ownership to 62,062 shares. More importantly, Chief Executive Officer and President Douglas L. Kennedy snapped up 2,000 shares on the same day for $19.51 each, boosting his ownership stake to 174,446 shares. An additional 1,000 shares were purchased by Chief Financial Officer and Senior Executive Vice President, Jeffrey J. Carfora, who currently owns 99,338 shares. The 1,000-share block was purchased on Tuesday for $18.86 each.

Peapack-Gladstone Financial Corp is a bank holding company for Peapack-Gladstone Bank, which also has a Private Wealth Management division. The bank’s wealth management division is one of the largest New Jersey-based trust and investment businesses with $3.32 billion of assets under administration, which differentiates the bank from over competitors. Fee income from the Private Wealth Management Division reached $4.30 million for the first quarter of 2016 and accounted for roughly 15% of the company’s total revenue, as compared to $4.03 million reported for the first quarter of 2015.

Shares of Peapack-Gladstone are up 18% in the past month, but they are still 3% in the red year-to-date. The stock is priced at 14.2-times expected earnings, slightly above the forward P/E multiple of 12.0 for the Regional Banks industry. Matthey Lindenbaum’s Basswood Capital owned nearly 833,000 shares of Peapack-Gladstone Financial Corp (NASDAQ:PGC) on December 31.

Disclosure: None