Insider buying sagged last week with just 46 companies reporting records of buyers. Considering all the worry about trading near a top, it's not surprising to see boardroom buyers back off the buying.
Ahh, but any worries over price levels didn't stop multiple insiders at Ladenburg Thalmann Financial Services (NYSEMKT:LTS) from continuing their buying spree. For the last two years, insiders have been gobbling up shares of the broker.
Ladenburg Thalmann Financial Services provides brokerage and advisory, investment banking, equity research, institutional sales and trading, asset management, and trust services. The company operates through two segments, Independent Brokerage and Advisory Services, and Ladenburg.
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Since March 2013, LTS insider bought 3.157 million shares of Ladenburg Thalmann, starting at $1.38. They have been buying ever since, despite the price more than doubling.
The latest wave has two directors, Phillip Frost, Md. and Saul Gilinski buy a combined 530,085 shares for a total investment of $1,841,200 (dollar cost average of $3.47) since the start of July.
Both men have been accumulating the stock. Gilinski added 396,474 shares to his portfolio since March 2013, staring at $1.63. Meanwhile, Frost has been at it for almost two years, purchasing a whopping 2.03 million shares since August 2012. He began buying at $1.37.
Apparently, these gentlemen believe in the merits of LTS.
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Perhaps, being undervalued versus its peers is why the pair continues to support Ladenburg Thalmann shares. The average broker trades at 2.41 times sales while LTS' price-to-sales (P/S) ratio stands at 0.91, which is the financial company's five-year average.
For 2015, analysts forecast revenue growth of 5.5% to $909.29 million. If Wall Street values LTS at its half-decade norm of 0.91 sales, then shares would lift by 5.5%. That's easy math right?
However, prior to April 2012, the broker tended to trade between 1 and 1.25 times sales. The current trend line is headed in that direction, again. With a P/S ratio of 1, Ladenburg Thalmann would trade at five bucks on the dot, using 2015's consensus revenue estimate.
Overall: The P/S trend for Ladenburg Thalmann Financial Services (NYSEMKT:LTS) suggests that LTS could get back to trading at one times sales in the next year or so. If that's the case, Frost, Gilinski and shareholders stand to make 42.86% from here should the stock hit $5.
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