Every once in a while I come across a real treat when I’m sifting through hundreds of stocks at a time…
And I happened to find one that made me smile just recently. That’s because it includes dividends, insider transactions, and profits!
Such a perfect trio of circumstances has made me especially excited about this stock…
It’s not everyday that you identify a single stock with three great characteristics. In fact, it’s hard to find a stock with any two of them!
Some stocks with insider buying are earning shareholders profits, sometimes a dividend stock has insider action despite heading straight down, but a dividend stock with insider buying that’s earning profits is a rare sight…
But that’s what I have come across with New Mountain Finance Corp. (NMFC)!
And I think that all of these characteristics may be intertwined with one another…
First of all, NMFC is a closed-end, non-diversified and externally managed investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended.
In the month of October, NMFC experienced two instances of insider buying valued at $5 million from the same director of the company, but that’s only a fraction of the insider action…
There has been consistent insider purchasing of NMFC for years! Although this most recent instance was significantly larger than past insider buys.
As far as price goes, NMFC is currently traded at approximately $14.80. This most recent price is the result of steady climbing since sitting just above the $13 in May of this year.
And where dividends come into play, I believe everything comes together…
NMFC just scheduled its 3rd quarter earnings release and dividends announcement for early November. And this scheduling happens to coincide pretty well with that recent insider buying.
From what I can see, I believe that the insider who bought $5 million worth of shares may have just learned of some great results for the 3rd quarter earnings and dividend announcement just before they scheduled the release date.
Knowing that good news on both fronts would likely push the price of NMFC up, the insider could have bought shares in order to try to profit from such movement.
I’m going to keep an eye on NMFC, especially as it nears the November announcement, and look for more signs of potential growth.
The key in this situation is knowing when to enter the trade, which is taught in our Stock Code Breaker course.
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