Bradford Phillips, a director at American Realty Investors (ARL), recently bought 2,000 shares. The buy increased his holdings by 46 percent, and came to a total cost of $40,000.
This is the third time the director has bought shares in the past year, following two buys in the $35,000 range in the fall. There have been no other insider buys, or insider sales, over the past two years.
Even with that lack of activity, company insiders own about 91 percent of shares.
The multifamily developer and operator has seen shares drop about 12 percent in the past year, as rising interest rates have weighed on the real estate market. Revenues have dropped 5 percent, and the company didn’t earn a profit in the most recent quarter.
However, shares trade at about 1 times forward earnings, and at over a 40 percent discount to their book value.
Action to take: Shares look like an overlooked small cap value play here, with room for more upside ahead as interest rates peak and the real estate market moderates. Those looking for income may want to look elsewhere, however, as ARL doesn’t pay a dividend.
For traders, options aren’t available on this play. But a larger REIT such as Mid-America Apartment Communities (MAA) has also been in a downtrend. Their June $140 puts, last going for about $2.50, could deliver mid-double-digit returns on a further decline in the weeks ahead.
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.