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Welcome to edition fifteen of Insider Weekends. Insider buying increased last week with insiders purchasing $16.7 million of their stock when compared to $13.15 million in the week prior. Against a backdrop of the S&P 500 posting a gain of 7.27% in the first half of September, selling increased more significantly with insiders selling $889.33 million worth of stock when compared to $475.55 million in the week prior.

Sell/Buy Ratio:

The insider Sell/Buy ratio is calculated by dividing the total insider sales in a given week by total insider buying in that week. The adjusted ratio for last week went up to 53.26. In other words, insiders sold more than 53 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the week prior when the ratio stood at 36.16. We are calculating an adjusted ratio by removing transactions by funds and companies and trying as best as possible only to retain information about insiders and 10% owners who are not funds or companies.

Insider Sell Buy Ratio September 17 2010

Note: As mentioned in the first post in this series Introduction to Insider Weekends, certain industries have their preferred metrics such as same store sales for retailers, funds from operations (FFO) for REITs and revenue per available room (RevPAR) for hotels that provide a better basis for comparison than simple valuation metrics. However metrics like Price/Earnings, Price/Sales and Enterprise Value/EBITDA included below should provide a good starting point for analyzing the majority of stocks.

Notable Insider Buys:

1. Icahn Enterprises, L.P. (IEP): $37.69

Chairman of Board of GP Carl Icahn acquired 111,241 shares of this diversified holding company, paying $33.75 per share for a total amount of $3.75 million.

P/E: N/A Forward P/E: N/A Industry P/E: 12.35
P/S: 0.4 Price/Book: 0.98 EV/EBITDA: 7.17
Market Cap: $3.16B Avg. Daily Volume: 18,832 52 Week Range: $30.12 – $51.65

2. American Eagle Outfitters, Inc. (AEO): $14.9325

Director Michael Jesselson acquired 89,800 shares of this apparel and accessories retailer, paying $14.68 per share for a total amount of $1.32 million.

This follows the $6.8 million purchase by the Chairman last week. What struck me about this purchase was that Mr. Jesselson sold $2.2 million worth of AEO stock last December at a much lower price of $10.09.

P/E: 22.49 Forward P/E: 13.57 Industry P/E: 12.74
P/S: 0.94 Price/Book: 2.08 EV/EBITDA: 6.13
Market Cap: $2.92B Avg. Daily Volume: 5,031,890 52 Week Range: $11.35 – $19.86

3. Spartech Corp. (SEH): $8

Shares of this plastics & packaging manufacturer were acquired by three insiders:

  • Newly appointed CEO Victoria Holt acquired 72,037 shares paying $7.13 per share for a total amount of $513,624.
  • Director Jackson Robinson acquired 10,000 shares paying $7.03 per share for a total amount of $70,300.
  • Director Walter Klein acquired 7,000 shares paying $6.90 per share for a total amount of $48,300.

Spartech rebounded rapidly last week following an earnings related plunge the week prior that saw the stock hit an intraday 52 week low of $6.06 on September 9th.

P/E: 13.09 Forward P/E: 11.11 Industry P/E: 16.42
P/S: 0.26 Price/Book: 0.98 EV/EBITDA: 5.34
Market Cap: $247.30M Avg. Daily Volume: 333,423 52 Week Range: $6.06 – $15.55

4. National Oilwell Varco, Inc. (NOV): $41.28

Director Robert Beauchamp acquired 12,300 shares of this oil & gas equipment & services provider, paying $40.72 per share for a total amount of $500,814

This is the only purchase of National Oilwell Varco this year. Mr. Beauchamp has served on NOV’s board since August 2002 and is currently the Chairman and CEO of (BMC) Software.

P/E: 10.77 Forward P/E: N/A Industry P/E: 22.93
P/S: 1.41 Price/Book: 1.16 EV/EBITDA: 5.28
Market Cap: $17.30B Avg. Daily Volume: 4,813,750 52 Week Range: $32.18 – $50.17

5. Rural/Metro Corp. (RURL): $8.51

President & CEO Michael Dimino acquired 48,500 shares of this medical ambulance services provider, paying $8.54 per share for a total amount of $414,419.

The CEO also purchased 58,632 shares back in June and a director purchased 10,000 shares at the same time. Insiders already own more than 40% of the company.

P/E: 61.67 Forward P/E: 11.82 Industry P/E: 62.68
P/S: 0.41 Price/Book: N/A EV/EBITDA: 6.58
Market Cap: $215.22M Avg. Daily Volume: 216,932 52 Week Range: $3.94 – $9.35

Notable Insider Sales:

1. Lululemon Athletica Inc. (LULU): $43.8

Chief Innovation and Branding officer Dennis Wilson (father of founder Chip Wilson) sold 690,000 shares of this retailer of technical athletic apparel at $41.59 per share generating a total amount of $28.70 million.

610,000 of these shares were obtained on conversion of exchangeable shares of Lulu Canadian Holding, Inc. for shares of Lululemon Athletica inc. for no consideration at a 1:1 exchange ratio. The rest of the 80,000 shares were sold directly.

P/E: 37.37 Forward P/E: 29.8 Industry P/E: 17.23
P/S: 5.46 Price/Book: 10.63 EV/EBITDA: 19.14
Market Cap: $3.11B Avg. Daily Volume: 1,300,510 52 Week Range: $21 – $46.49

2. Linn Energy, LLC (LINE): $30.3275

Executive Chairman Michael Linn sold 800,000 shares of this independent oil and natural gas company at $32.62 per share, generating a total amount of $24.50 million.

It was a little unusual to find the following in one of the footnotes of the filings “In an effort to diversify his personal investment portfolio, Mr. Linn planned to sell a total of 800,000 units of Linn Energy, LLC (the “Company”). He completed these sales over the past three days. Following these sales, Mr. Linn continues to hold 538,365 Company units.” Is it possible to not view a 60% reduction in the Executive Chairman’s stake at a price very close to a 2 year high negatively?

P/E: N/A Forward P/E: 17.95 Industry P/E: 19.41
P/S: 8.22 Price/Book: 1.59 EV/EBITDA: 17.03
Market Cap: $4.47B Avg. Daily Volume: 1,015,050 52 Week Range: $12.6 – $31.83

3. Old Dominion Freight Line Inc. (ODFL): $26

Shares of this logistics services provider were sold by four insiders:

  • Vice Chairman of the Board John Congdon sold 106,805 shares at $25.64 per share, generating a total amount of $2.74 million
  • Executive Chairman Earl Congdon sold 92,461 shares at $25.63 per share, generating a total amount of $2.37 million
  • Executive VP & COO John Yowell sold 47,811 shares at $25.73 per share, generating $1.23 million
  • President & CEO David Congdon sold 40,646 shares at $25.59 per share, generating $1.04 million

These sales were part of a newly adopted 10b5-1 trading plan by certain executives and family shareholders of Old Dominion.

P/E: 29.45 Forward P/E: N/A Industry P/E: 13.62
P/S: 1.09 Price/Book: 2.32 EV/EBITDA: 9.43
Market Cap: $1.45B Avg. Daily Volume: 507,086 52 Week Range: $16.0667 – $27.2933

4. Vornado Realty Trust (VNO): $86.53

Shares of this office and retail REIT were sold by two insiders:

  • Chairman Steven Roth sold 200,000 shares at $86.3 per share, generating $17.26 million
  • Director Russell B Wight Jr sold 10,000 shares at $86.82 per share, generating $868,177

The company is making our list for the second week in a row following a $5.96 million sale by Director Russell Wight and a $2.47 million sale by EVP Sandeep Mathrani last week. VNO has a yield of 3%.

P/E: 67.76 Forward P/E: N/A Industry P/E: 12.35
P/S: 5.53 Price/Book: 2.9 EV/EBITDA: N/A
Market Cap: $15.77B Avg. Daily Volume: 1,504,690 52 Week Range: $56.54 – $87.62

5. WebMD Health Corp. (WBMD): $52

Shares of this health information services provider were sold by three insiders:

  • Chairman of the Board Martin Wygod sold 249,462 shares at $52 per share, generating a total amount of $12.97 million
  • Director Kevin Cameron sold 64,052 shares at $52 per share, generating $3.33 million
  • Director Herman Sarkowsky sold 20,788 shares at $52 per share, generating $1.08 million
P/E: 24.4 Forward P/E: N/A Industry P/E: 22.7
P/S: 6.22 Price/Book: 4.03 EV/EBITDA: 28.45
Market Cap: $3.02B Avg. Daily Volume: 230,720 52 Week Range: $31 – $52
Source: Insider Buys and Sells: Icahn Enterprises, Lululemon Athletica