Arturo Moreno, a major holder at Clear Channel Outdoor Holdings (CCO), recently bought 5,000,000 shares. The buy increased his stake by 10%, and came to a total cost of $4,775,000.
This is the third insider buy of the year, following an 800,000 share buy from a company director for just over $1 million at the end of February, and a 50,000 share buy from the CEO for $63,000 around the same time.
Overall, Clear Channel insiders own 17.3% of shares.
The billboard and advertising service company has slid 44% over the past year, as earnings have been non-existent and Clear Channel has list over $120 million.
Plus, while Clear Channel has $110 million in cash, it has over $7 billion in debt, more than 10 times its market cap. With the chance of further losses ahead, investors are likely to see a higher prospect for bankruptcy, although shares will likely see some short-term rallies in the interim.
Action to take: Given Clear Channel’s fundamentals and poor balance sheet, investors should look elsewhere in the advertising space. If the company continues to lose money it its current rate, it could become a high bankruptcy risk in the next year.
For traders, options are limited, but the June $1.00 puts, last trading for about $0.15, are an at-the-money trade that could see high double-digit returns or better if shares continue to trend lower in the coming weeks.
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 company mentioned in this article.