Tuesday, November 22, 2011

Cluster Insider Buying at Terex

Terex (TEX) has seen 11 insiders make purchases providing a very strong insider buying signal called a "cluster-buy". The insiders purchases 32,502 shares at an average price of $14.71/share, for a total of $478K. 

Not a massive amount of money, but definitely a strong signal with the purchases being so wide spread. Of course, it could just be a internal scam to trick outside investors. 

The interesting opportunity presented investors today is the ability to buy shares at prices lower the insiders. As much as people think the game is rigged, other people realize that it does present opportunities to buy at the same price as people with inside knowledge. 

TEX has been saying for a long time that its business has been picking up, but the market has ignored them for the post part. It wouldn't be the first time that insiders were blind to changes in the global economy. 

TEX is a solid holding in our Opportunistic models as below so we're definitely hoping this insiders know what they are doing. 

Data per Yahoo Market Pulse:

Stone Fox Capital holds an allocation of 3.4% in $TEX in his Opportunistic Arbitrage Long Only Covestor Model

Stone Fox Capital holds an allocation of 9.7% in $TEX in his Opportunistic Arbitrage Covestor Model


Disclosure: Long TEX. Please review the disclaimer page for more details. 


10 comments:

James Clarkston said...

I do not want to personally attack the author of this article, but they need to look more into the data at hand on Terex Stocks.

First, recent buying would be to me, within the last 20 or so trading days, or roughly the last month.

Second, you are noticing a trend of the insiders cyclical buying through the employee stock purchase program. Case in point look at CEO Ron DeFeo’s purchases over the last 3 monthly transaction periods. All within 1% of each other.
Look at the same transaction dates for Brian J Henry, within 1% for all 3 buying periods.
Look at the same transaction dates for Phillip Widman, within 1%.
Look at the same transaction dates for Kevin Barr, within 1%.
Look at the same transaction dates for Kenneth D. Lousberg, within 1% for all 3 buying periods with 1 additional purchase.


See a trend? Only a small number of these guys is buying additional stock, roughly 4 of the 11 that you purported to have purchased based on your analysis of the insiders.

The only ones that break the trend are David A Sachs, Kieran Hegarty, George Ellis, and Ken Lousberg.

You might want to check in on these figures before you buy into Terex Stock. While it is undervalued, notice none of the insiders bought at the 52 week low, most of them bought as it was recovering from its 52 week low about a week later, and while they did see the upside of the 3rd quarter numbers that were released on October 26, some have bought above the 50 day moving average. Watch for Terex to be a hot stock in 2012 based strictly on the numbers and because the market has down played Terex in 2011. I am long TEX and buying in at all lows.

Mark Holder said...

Great points. Probably should've done more research. This thesis was from Forbes and didn't alter my opinion on the stock, but I thought was interesting data.

The insiders clearly aren't the best timers, but they have established a trend of buying in these relative levels. The key to me is that you can buy below the insiders. It doesn't happen often that investors are being tipped off by insiders and the price is cheaper.

James Clarkston said...

Terex is a stock I have watched for about the last year and a half. I have been able to forecast trends based on the numbers the market gives.

By religiously looking at the analyst reports, and the wild swings in the stock value it is clear that the market does not understand how versatile Terex really is as a corporation. Exposed to not just the US, but also to Europe and the emerging markets in Asia, Terex is poised for growth with all its business segments. In Q3 2011, being able to beat analyst projections was only just the beginning, look for TEX to put down large gains in its peak cyclical activity at the end of Q1 and early Q2 regardless of the market conditions throughout Europe, the far east, and globally.

Mark Holder said...

Agree.

James Clarkston said...

http://www.google.com/finance?client=ob&q=NYSE:TEX

Have you been watching the changes in Terex lately? Were you able to take in some of the most recent gains?

I am very enthused at the results I have been seeing while buying the stock on the low, with my latest purchase of the stock occurring at 13.10, I am already up nearly 25% in less than a week.

Mark Holder said...

Watch it every day. TEX is a decent holding in 2 of my models. Actually surprised at the action today. TEX was one of the few stocks that held and added to gains from Wed.

Not sure what to attribute todays strength other than either a technical bounce off the 50ems or the reverse H&S pattern.

James Clarkston said...

Checking in to see where you are with Terex Stock in your holdings models. I'm up approximately to aproximately 47% profit in my gains since Decemeber 16th on my last buy in. I have some reserve waiting to be put in after all the shorts come in the week of February from the stock beating analyst projections the second week of February. Q1 Numbers look to be very good just based on the backlog they showed at the end of Q3 and I look to see more coming up as their clients will switch from owning to renting. Terex AWP's largest customer is United Rentals, which has been showing growth in the Market, especially with their acquisition of RSC.

None of this even accounts for the fact that Demag AG has been showing growth, and with Terex holding 82% we will see a cash buyout of the remaining shares by Q2 2012.

What are your thoughts on this stock recently?

I am long TEX.

Mark Holder said...

TEX has performed just as we thought. Actually expected the stock to pause for a while at $19. See no reason it doesn't go back to the July high of $30 and won't even look at selling until that point. Unlikely to even sell then.

Do you follow URI? That stock has rocketed from 14 to 34. Wow, should've bought the rental company instead of the equip maker.

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