One High-Flying Gold and Silver Producer and Two Other Companies Witness Insider Buying

Last week’s dollar volume of insider buying skyrocketed relative to the volume recorded for the prior week, thanks to the insider buying registered at United Continental Holdings Inc. (NYSE:UAL) (read article). In fact, the insider buying at the airline carrier accounted for approximately 85% of last week’s dollar volume of insider buying. Meanwhile, the volume of insider selling was flat week-over-week, so last week’s ratio of insider selling over insider buying dropped notably when compared to the extremely high ratio registered in the prior week (five versus 74). As the insider buying activity has been gaining steam in the past several trading sessions, retail investors may stumble upon more attractive investment opportunities signaled by insider trading metrics. Directors and executives mostly buy securities of their companies because they believe those securities are undervalued, and they tend to make profitable trades on most occasions. Insider Monkey processed most Form 4 filings submitted with the SEC on Friday and identified three companies with fresh 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).

Closed-End Investment Company That Trades below NAV Witnesses Noteworthy Insider Buying

Let’s begin our discussion by looking into the insider buying at Central Securities Corp. (NYSEMKT:CET), which had two different insiders buy shares in April. Jay R. Inglis, Board member since 1973, purchased 3,000 shares on Wednesday for $19.85 each, 2,300 shares on Thursday for $19.65 each, and 2,000 shares on Friday at $19.44 apiece. After the recent purchases, Mr. Inglis currently owns 12,066 shares. Moreover, Vice President John C. Hill bought 1,000 units of common stock in mid-April at a price of $19.38 per unit, lifting his ownership to 14,250 units.

Central Securities Corp. (NYSEMKT:CET) operates as a closed-end investment company that primarily invests in common stocks, but may also invest in other securities such as bonds, convertible bonds, preferred stocks, convertible preferred stock, warrants, and other securities. The company’s net assets per common share reached $24.07 on March 31, as compared to $23.53 per share at the end of December. This represents an increase of slightly more than 2%. Meanwhile, Central Securities’ share price gained less than 1% during the first quarter of this year, so the company’s stock performance does not entirely reflect actual performance of its portfolio.

It should be noted that the investment company’s shares were trading at a discount of at least 20% relative the net assets per common share figure at the end of March, which might serve as the primary explanation for the aforementioned insider buying. Andrew Weiss’ Weiss Asset Management acquired a new stake of 17,624 shares of Central Securities Corp. (NYSEMKT:CET) during the final quarter of 2015.

The next two pages of this insider trading article discuss the insider buying recorded at Coeur Mining Inc. (NYSE:CDE) and Oak Valley Bancorp (NASDAQ:OVLY).

Strong-Performing Gold and Silver Producer Had Chairman Buy Shares Last Week

Coeur Mining Inc. (NYSE:CDE) had one of its most informed insiders buy some shares last week. Robert E. Mellor, Non-Executive Chairman, snapped up 2,000 shares on Friday at a cost of $7.84 per share, which lifted his ownership to 101,354 shares. Mr. Mellor bought an additional 2,000 shares in early March for $4.69 each.

The shares of the gold and silver producer have embarked on a steady uptrend since late January, gaining a whopping 226% since the beginning of the year. Numerous insiders at Coeur Mining, including Mr. Mellor, were buying shares throughout 2015, which makes us believe they knew Mr. Market didn’t value their company’s underlying potential appropriately. Coeur Mining’s stock performance has been mainly boosted by surging silver prices, which increased from a 52-week low of $13.71 per ounce reached in December to nearly $18 per ounce. Coeur Mining, which operates mines located in the United States, Mexico, and Bolivia and has exploration projects in Mexico and Argentina, produced 3.4 million ounces of silver and 78,072 ounces of gold during the first quarter of this year, but gold contributed to 64% of the company’s overall sales. The company’s metal sales for the first quarter decreased 3% year-on-year due to lower average realized silver and gold prices, as well as lower silver ounces sold. Meanwhile, Coeur Mining’s net loss narrowed down year-on-year, with the net loss figure decreasing to $20.4 million in the first quarter of 2016 from $33.3 million registered a year ago.

There were a total of 14 hedge funds tracked by Insider Monkey with stakes in the gold and silver producer at the end of December, which amassed approximately 13% of the company’s outstanding common stock. Himanshu H. Shah’s Shah Capital Management reported ownership of 3.12 million shares in Coeur Mining Inc. (NYSE:CDE) through the latest round of 13Fs.

Oak Valley Bancorp Had Two Different Insiders Purchase Shares Last Week

Oak Valley Bancorp (NASDAQ:OVLY) saw two members of its Board buy shares last week. To begin with, Director H. Randolph Holder Jr. purchased 2,300 shares on Tuesday and 3,946 shares on Thursday at $9.52 apiece, which lifted his ownership to 39,632 shares. Don Barton, another Board member, acquired 3,500 units of common stock last Monday at a cost of $9.40 per unit, lifting his holding to 23,000 units.

Oak Valley Bancorp operates as the bank holding company for Oak Valley Community Bank, which offers a range of commercial banking services for both individuals and small to medium-sized businesses in two main areas of service: the Central Valley and the Eastern Sierras. In December 2015, Oak Valley completed the acquisition of a California state-chartered bank, called Mother Lode Bank, for $7.3 million. In early 2016, Oak Valley closed Mother Lode Bank’s two branches in Sonora, California, as the acquirer’s two existing branches in the region were believed to be able to support the freshly-attained customers. Oak Valley Bancorp currently maintains 16 full-service officers.

The extremely low market interest rates in the past several years have had a negative impact on the company’s net interest income despite a slight increase recorded in 2015, which was driven by growth in earning assets. The company’s business plan for 2016 involves a relationship-based expansion throughout its service markets, so the bank plans on increasing its loan-to-deposit ratio to boost net interest margin. The shares of Oak Valley are down 8% year-to-date, but they are flat over the past 12 months. There were no hedge funds tracked by Insider Monkey with stakes in Oak Valley Bancorp (NASDAQ:OVLY) at the end of 2015.

Disclosure: None