Jay Farner, CEO of Rocket Companies (RKT), recently picked up 8,900 shares. The buy increased his stake by just over 0.5 percent, and came to a total purchase price of $99,000.
That’s the first insider transaction of any kind over the past year. Just over one year ago, a major shareholder sold 20,200,000 shares, just before the price started to slide by about 55 percent.
Overall, company insiders own about 2.6 percent of shares.
The mortgage company has slid by a full 50 percent over the past year. Revenue and earnings growth have slowed by a similar amount as mortgage refinancings have slowed amid rising interest rates.
Even with that slowdown, shares look reasonable at 10 times forward earnings, and the company’s price to book value has dropped from over 6x to 2x in the past year. While mortgage activity may slow down, it’s a function of the market that never truly goes away, and the sector has been coming off a long period of ultra-low rates and record refinancings.
Action to take: Investors may like shares for a rebound given how oversold they are in the short-run. However, shares don’t pay a dividend, so income investors may want to look elsewhere.
For traders, the June $15 calls, last going for about $1.33, offer the potential for mid-double-digit returns on a rebound in the stock in the coming weeks. Traders should look to take profits quickly on any jump higher in shares.
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.