David Spector, Chairman and CEO of PennyMac Mortgage Investment Trust (PMT), recently added 20,000 shares. The buy increased his holdings by over 9.4 percent, and came to a total purchase price just under $275,000.
This is the first insider buy at the company since February. Overall, company insiders have been fairly active over the past few years as sellers of shares. It’s only during lower price points for the company such as now and in early 2020 that insiders have been buyers.
Overall, company insiders own 0.9 percent of shares.
The mortgage REIT is down about 25 percent in the past year, as rising mortgage rates have cut back on lending activity and the new issuances of mortgages. That’s taken the company’s valuation to 0.85 percent of book value, or a 15 percent discount to the loans on the books.
Action to take: As a REIT, the company is structured to pay out a high dividend. So while there’s slow growth in the payout, it’s quite high right now, with a 13.6 percent payout. And over time, shares should move back to book value, although they may get a bit cheaper in the coming weeks first.
For traders, options on PMT are a bit limited. But the April $17.50 calls, last going for $0.20, could deliver mid-double-digit returns on a move higher in shares. It would make sense to wait for a big down day in the stock and look to take quick profits on a rebound rather than hold the trade until expiration.
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.