Mortgage Company Execs Cash Out
About a week ago we posted a story about mortgage company REIT, New Century Financial and remarked on their diminishing net interest margins. As turns out, insider selling at New Century has been pretty rampant. Although I view insider sales in general as common and not always indicative of coming future problems, it is noteworthy that insider buying is non-existent.
[OBSERVERS MIGHT EXPECT INSIDERS at a struggling sub-prime mortgage lender to do a little bottom fishing.
But they would be wrong.
Since May, New Century Financial insiders have sold more than half a million of the company's shares, according to Securities and Exchange Commission filings. Some of those insiders have also exercised options, and all have sold stock through trading plans, according to SEC filings.
Trading at 34.78, the stock is 48% off its 52-week-high. The shares trade at 4.4 times projected earnings for the next four quarters – lower than a five-year forward median of 5.5x, according to Thomson Financial Baseline.
"What you don't see here is the insider buying that you would expect if insiders really believed that investors had overreacted," says Jonathan Moreland.
"If insiders really believed in the health of this business," they would be buying, not selling shares, he adds.
New Century, which is incorporated as a real estate investment trust, has struggled with margins. Last month, company officials lowered the year's earnings per share forecast to a range of $7.25 to $7.75, from $8.25 to $9.”]
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[OBSERVERS MIGHT EXPECT INSIDERS at a struggling sub-prime mortgage lender to do a little bottom fishing.
But they would be wrong.
Since May, New Century Financial insiders have sold more than half a million of the company's shares, according to Securities and Exchange Commission filings. Some of those insiders have also exercised options, and all have sold stock through trading plans, according to SEC filings.
Trading at 34.78, the stock is 48% off its 52-week-high. The shares trade at 4.4 times projected earnings for the next four quarters – lower than a five-year forward median of 5.5x, according to Thomson Financial Baseline.
"What you don't see here is the insider buying that you would expect if insiders really believed that investors had overreacted," says Jonathan Moreland.
"If insiders really believed in the health of this business," they would be buying, not selling shares, he adds.
New Century, which is incorporated as a real estate investment trust, has struggled with margins. Last month, company officials lowered the year's earnings per share forecast to a range of $7.25 to $7.75, from $8.25 to $9.”]
More (Subscription required)
posted by Little_Silvered at 7:01 PM
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