Farhad Nanji, a director at PennyMac Financial Services (PFSI), recently added 95,982 shares. The buy increased his stake by over 2 percent, and came to a total price of just over $5.8 million.
The buy came 4 days after he made another buy of 204,018 shares, costing just under $12.5 million. Over the past three years, insider transactions have featured more insider sales, but buys have been more prominent in the past few months.
Overall, insiders own 15.3 percent of company shares.
Shares of the mortgage servicing company have dropped 7 percent in the past year, likely in part due to expectations that higher interest rates will put a damper on the housing market, from lower prices and home sales to fewer refinancings.
Even with the drop in shares, the company looks undervalued here, trading at just 5 times forward earnings and sporting a 28 percent profit margin.
Action to take: Investors may like shares here. Besides being undervalued at present levels, the stock pays a 1.3 percent dividend yield. The payout is low at under 6 percent of earnings, so there’s room for more dividend growth in the future.
For traders, shares recently slid with the overall market, and could rebound on a market rally in the next few months. With that in mind, traders may like the May $65 calls. Last going for about $2.70, the option could turn a modest move higher in shares into a high double-digit return.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.