Insider Trading Report: PennyMac Financial Services (PFSI)

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.

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  • 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.

    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.

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  • 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.

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