CD&R Investment Associates, a major holder of Beacon Roofing Supply Inc (BECN), recently added 99,880 shares to their holdings. The buy increased the fund’s stake by 1 percent, and came to a total cost of $6 million.
This is the second buy from this fund so far this year. A company President bought 3,850 shares in March, paying just over $250,000 to increase their holdings by 43 percent. Overall, insider buying has been far greater than sales over the past two years.
In total, company insiders own 0.5 percent of shares. And nearly the entire float is owned by institutional investors such as CD&R.
The roofing materials supply company has traded flat over the past year, and earnings are down by nearly a quarter amid flat revenues. However, shares are inexpensive at 10 times earnings, and the spring and summer seasons tend to be busier for the roofing industry, followed by hurricane season into the fall.
Action to take: Investors may like shares now ahead of a seasonal trend higher. The stock doesn’t pay a dividend, so investors won’t be paid to wait for a move higher.
For traders, shares have been somewhat rangebound over the past year, and are moving higher. Shares can likely trend towards $65 before the rally starts to slow down. The July $65 calls, last going for $2.05, can likely deliver mid-double-digit returns in the weeks ahead on a further push higher in BECN 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.