EBITDA gains are coming from the fact that used-car prices are very strong, meaning car-rental agencies can recoup more of their investments as they turn over their fleets. Meanwhile, the entire company's equity is valued at just $1.26 billion, and coupled with the debt, comes in under $4 billion.
With $600 million to $800 million in potential annual EBITDA generation, shares look quite oversold, which is the likely reason behind heavy insider-buying. A total of 15 insiders bought a little more than 100,000 shares -- collectively -- in early October.2. Ligand Pharma (Nasdaq: LGND)
Ligand's insiders have been "buying in the way up," meaning they've continued to accumulate shares even as the stock's price has risen. The buying began in early August when BVF Partners (which owns more than 10% of the company and, for our purposes, is defined as an insider because the large investor can't trade on material non-public information and must file every time shares are bought or sold) bought 600,000 shares over a three day period, worth about $10 million, at just under $11 a share. Since then, several company directors have also been buying at prices as high as $15. Shares are back down to $14 currently, and look to have solid upside from here.
This is a unique biotech company. Rather than develop its own drugs, Ligand invests in other biotech firms, generating income from milestone payments and royalties that small firms get from their Big Pharma partners. Ligand likes to focus on early-stage firms needing cash and possessing considerable upside. Right now, Ligand has a hand in more than 50 companies, about half of which have already pushed their drugs to Phase II clinical trials or beyond.
To get a sense of the value of Ligand's investments, you have to do a sum-of-the-parts analysis. Investment banking firm McNicoll, Lewis and Vlak figures shares are a double from here, or worth $30, while I have read elsewhere that a valuation analysis pegs the stock at around $21.
3. Exco Resources (NYSE: XCO)
As I've been discussing in recent days
, major investors are paying hefty prices to snap up natural-gas–producing properties.
While I've been looking at what other companies might prove attractive in an M&A scenario, I can't help notice that mega-investor Wilbur Ross is setting his sights on this oil and gas firm, which operates more than 7,000 wells in Texas, Louisiana and Appalachia.