MFN Partners, a holder with a director stake at PennyMac Financial Services (PFSI), recently bought 94,106 shares. The buy increased the fund’s holding by less than 10 percent, but came to a total purchase price of just over $6 million.
The fund made repeat buys back in March, and shares are down high double-digits since then. Overall, insiders tend to be bigger sellers than buyers. Overall, insiders own over 44 percent of shares, so the level of insider selling isn’t a massive issue.
Shares of the mortgage provider and servicer are up 123 percent in the past year, more than twice the return of the S&P 500. The company has benefited from lower interest rates and the wave of home refinancing that resulted.
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Overall, the company sports a 32 percent profit margin, and has seen triple-digit earnings and revenue growth.
Action to take: With home prices likely to continue higher, shares should perform well. The recent rally may slow, as slightly rising interest rates is likely to weigh on home refinancing going forward.
Investors may like shares here, although the company’s 0.8 percent dividend yield is a low one, it has been rising.
For traders, the August $60 calls, trading for about $4.95, are an at-the-money trade with mid double-digit return potential in the coming weeks if shares continue their current uptrend.
Disclosure: The author of this article has no positions in the stock mentioned here, and has no intention of changing or starting a new position in the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.