Noteworthy Insider Purchases Uncovered at Progressive Corp (PGR), Green Bancorp Inc. (GNBC), and United Technologies Corporation (UTX)

Unexpectedly, there are growing concerns about a forthcoming U.S recession, thanks to softening industrial production over the past several months. Corporate profits for the fourth quarter of 2015 are on track to decline by a significant 5.8% year-over-year, which may also serve as reason for concern for stock market participants. However, one should not forget that the U.S labor market has been strengthening and consumer sentiment has been on the rise in recent quarters. Most importantly, investors and companies should be aware of self-fulfilling prophecies, as their worries might trigger an actual U.S recession by heavily curtailing investment and reducing workforces. Of course, the strong U.S dollar has put weight on companies’ profits in recent quarters, but a stronger greenback is a sign of global investors’ confidence in the strength of the U.S economy. Meanwhile, some companies’ insiders have been buying more shares of their companies lately despite increased economic worries. As a general rule, heavy insider buying represents a bullish signal, so let’s take a look at the recent insider buying behavior witnessed at three companies.

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Let’s begin our discussion by analyzing insiders’ bullishness at Progressive Corp (NYSE:PGR). John F. Auer, President and Chief Executive Officer of ARX and ASI, bought 50,000 shares on Monday at a cost of $30.28 per share. After the recent purchase, the Executive holds an ownership stake of 106,003 shares. The stock of the auto insurance giant has advanced by 15% over the past 12 months despite losing 4% thus far in 2016. The company’s recent fourth-quarter earnings report shows that its growth has been slowing in recent months. Progressive Corp (NYSE:PGR)’s net premiums written for the quarter totaled $4.84 billion, which marked an increase of 5% year-over-year. Most importantly, the company’s net premiums written for December declined by 11% year-over-year to $1.39 billion. The fourth-quarter growth in premium revenue might be a cause for concern for some investors, considering that the company’s net premiums written for the nine months that ended September 30 grew by as much as 12% year-over-year, to $15.73 billion. However, Progressive’s operating results for 2014 counted in an additional week of activity for December, so comparisons presented above do not provide a completely accurate picture. Moreover, the company’s combined ratio, which is used as a measure of underwriting profitability, reached 92.0 in the fourth quarter, compared to 90.9 reported for the same period of the prior year. But the question of whether the stock represents an attractive investment or not still remains unanswered. The stock trades at a forward price-to-earnings multiple of 14.39, which is above the ratio of 11.4 for the Property and Casualty Insurance industry. Ric Dillon’s Diamond Hill Capital owns 5.28 million shares of Progressive Corp (NYSE:PGR) as of September 30.

The next two pages of this article reveal the insider purchases registered at Green Bancorp Inc. (NASDAQ:GNBC) and United Technologies Corporation (NYSE:UTX).

Green Bancorp Inc. (NASDAQ:GNBC) has seen four top executives purchase shares so far this week. To begin with, Executive Vice President and Corporate Chief Credit Officer Donald S. Perschbacher snapped up 10,000 shares on Tuesday at prices that ranged from $6.94 to $6.95 per share, lifting his overall holding to 51,500 shares. Chairman and Chief Executive Officer Manuel J. Mehos bought 32,600 shares on the same day at $6.91 apiece and currently holds an ownership stake of 362,600 shares. Furthermore, 14,465 shares were purchased by President Geoffrey D. Greenwade, who currently owns 49,606 shares. The 14,465-share block was acquired at a weighted average price of $6.92. Last but not least, Chief Financial Officer and Senior Executive Vice President John P. Durie bought 3,000 units of common stock on Tuesday for $6.95 each, enlarging his stake to 57,076 shares.

The Texas-focused bank holding company offers commercial and private banking services through nationally chartered commercial bank Green Bank. The shares of the company have lost more than 50% since the beginning of December, turning the company’s stock into an extremely attractive investment opportunity. The stock trades at a forward P/E ratio of 6.21, which is substantially below both the ratio of 12.1 for the financial sector and 15.89 for the S&P 500 Index. Green Bancorp’s full-year 2015 earnings per share totaled $0.53 (excluding one-time acquisition expenses the total stood at $0.67), compared to EPS of $0.64 reported for 2014. The company’s deposits for 2015 increased by 68% year-over-year to $3.1 billion, while loans increased by 74% to $3.1 billion ($250 million due to organic growth). A mere seven hedge funds tracked by Insider Monkey had stakes in the company at the end of the third quarter. Jim Simons’ Renaissance Technologies LLC held a stake of 107,700 shares in Green Bancorp Inc. (NASDAQ:GNBC) at the end of September.

United Technologies Corporation (NYSE:UTX) recently recorded the first insider purchase of the company’s shares since early 2009, so let’s try to find out what might have persuaded that insider to purchase shares. Director Fredric G. Reynolds acquired 12,000 shares on Tuesday at prices varying between $85.86 and $86.25 per share, boosting his overall holding to 13,225 shares. The provider of high technology products and services to the building systems and aerospace industries has seen its stock decline by 28% over the past 12 months, mainly because of slowing economic growth in China and other emerging economies. The company’s total sales for 2015 decreased by 3% year-over-year to $56.1 billion, mainly because of the negative impact of foreign exchange. The company’s organic sales growth reached 1% last year, but the slowing Chinese economy has clearly impacted the company’s financial performance in recent quarters.

Let’s take a quick look at UTC’s Otis business segment, which provides elevators, escalators and moving walkways. This business segment generated approximately 21% of the company’s net sales in 2015 and represented the most profitable business of UTC, with an operating profit margin of 19.5%. Otis’ revenue from China had increased by roughly 20% annually for several years until 2014. However, new equipment orders within the Otis segment in China dropped by 19% year-over-year in the third quarter of 2015, so the turmoil in the world’s second-largest economy has greatly impacted United Technologies. However, the company has a forward P/E multiple of 12.25, which appears to reflect the weakening global economy. The hedge fund sentiment towards the stock was very negative in the third quarter, with the number of top money managers invested in the company declining to 48 from 57 quarter-over-quarter. Ken Fisher’s Fisher Asset Management holds an 8.18 million-share position in United Technologies Corporation (NYSE:UTX) as of the end of the third quarter.

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