Bill Boyd and Bob Boughner are the two most influential people at Boyd Gaming. Both recently bought stock. Should we care?

The last time there was a significant cluster of insider buying was in April and May of 2004. The stock more than doubled in 8 months. Management can trade as well. A year later they sold near the top, just before a 25% move down in the stock. Chairman Bill Boyd doubled his money on over 300k shares in a year’s time. Not bad.

I’m not exactly predicting a double in a year just because management bought stock again. However, it wouldn’t surprise me. I’m pretty sure BYD will generate between $1 and $2 of net free cash flow per share next year for a massive 30-60% free cash flow yield on today’s stock price. The stock could double and still yield a compelling 15%, worse case scenario.

The move could happen quickly. Short interest represents 20% of the float. Only 5 out of 19 analyst ratings are buys.

Now or later, there is real value in Boyd Gaming and they are not going bankrupt. It’s encouraging to see that management feels the same way.

Management buys low, sells high