Chatham Asset Management, a major holder at R.R. Donnelley & Sons (RRD), recently added to its stake with a 90,000 share buy. The total cost came to just over $574,000, and increased the fund’s total holdings in the company by 0.8 percent.
This buy adds on to a buy earlier in June, as well as a 1.4 million share buy back in May. Overall, the fund has been the biggest mover of shares in the past three years.
While one large sale by the fund has offset most of its purchases, other company insiders amount for 4.4 percent of company shares.
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The specialty business services provider has seen shares rally 447 percent in the past year, but shares have started to flatline in recent weeks. Over the past year, the company’s revenues have fallen slightly, while the firm has not posted positive earnings.
Action to take: Even with the company still unprofitable, shares look inexpensive relative to their price to sales and their value relative to revenue and EBITDA. The company’s trend towards making a profit means that there could be further upside ahead.
Investors can buy shares, but they pay no dividend here. A better trade might be the December $7 options. Last trading for about $1.15, they offer better upside potential if the longer-term uptrend in shares continues.
Disclosure: The author of this article has no position in the company mentioned here, but may make a trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.