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Welcome to edition twenty eight of Insider Weekends. Insider buying decreased last week with insiders purchasing $46.75 million of their stock when compared to $83.4 million in the week prior. Selling increased with insiders selling $2.48 billion worth of stock when compared to $1.75 billion 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 53.03. In other words, insiders sold 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 20.92. 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 December 17 2010

Insider Sell Buy Ratio December 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. Lincoln Educational Services Corporation (LINC): $15.54

Shares of this education & training services provider were acquired by two insiders:

  • Director James J Burke Jr acquired 175,000 shares, paying $15.19 per share for a total amount of $2.66 million
  • Director Alexis Michas acquired 131,147 shares, paying $15.19 per share for a total amount of $1.99 million

These purchases are very interesting for a number of reasons. Mr Michas and Burke are both co-founders of New York based private equity firm Stonington Partners with over $1 billion under management. Stonington Partners sold its entire stake of 3.9 million shares for $15.25 through an offering that closed on December 15, 2010.

These two purchases occurred a day after Stonington sold its stake and from the filings they appear to be direct purchases by Mr Michas and Burke. Lincoln is one of the for-profit education companies that have been hit hard this year. The company’s CFO also purchased nearly 7,000 shares paying $15.38 per share in November.

P/E: 5.93 Forward P/E: 7.1 Industry P/E: 18.2
P/S: 0.53 Price/Book: 1.5 EV/EBITDA: 2.44
Market Cap: $344.65M Avg. Daily Volume: 305,969 52 Week Range: $9.73 – $28.21

2. Vantage Drilling Company (VTG): $2.20

Shares of this oil & gas drilling & exploration company were purchased by two insiders:

  • Director Hsin-Chi Su acquired 2.2 million shares, paying $2.03 per share for a total amount of $4.5 million. Mr Su increased his stake by 2.28% to 99 million shares with this purchase.
  • Director George Esaka acquired 20,000 shares, paying $1.75 per share for a total amount of $35,000.

Mr Su purchased shares indirectly through F3 capital, which is wholly owned by Mr. Su.

I hold a long position in VTG.

P/E: N/A Forward P/E: 18.33 Industry P/E: N/A
P/S: 2.52 Price/Book: 0.75 EV/EBITDA: 22.73
Market Cap: $636.06M Avg. Daily Volume: 1,460,730 52 Week Range: $0.99 – $2.25

3. Scientific Games Corporation (SGMS): $9.63

Shares of this producer of lottery systems were purchased by two insiders:

  • Director Gerald Ford acquired 200,000 shares, paying $9.31 per share for a total amount of $1.86 million. Mr Ford increased his stake by 185.28% to 307,942 shares with this purchase.
  • Director Frances Townsend acquired 1,640 shares, paying $9.11 per share for a total amount of $14,940.

Following the cluster of purchases last week where a director purchased more than 4% of total outstanding stock, Scientific Games once again made our list. With these two purchases, a total of four directors have purchased stock since the start of this month.

P/E: N/A Forward P/E: 25.34 Industry P/E: 13.26
P/S: 0.96 Price/Book: 1.4 EV/EBITDA: 9.82
Market Cap: $882.18M Avg. Daily Volume: 1,022,430 52 Week Range: $6.58 – $17.01

4. Hubbell Inc. (HUB-B): $60.94

Group Vice President William Tolley acquired 20,000 shares of this electronic equipment company, paying $61.13 per share for a total amount of $1.2 million. Mr Tolley increased his stake by 228.7% to 28,745 shares with this purchase.

The odd thing about this filing was that Mr. Tolley sold 20,000 shares on December 13 after exercising options and then purchased 20,000 shares on December 15. Mr. Tolley has agreed to pay to Hubbell Incorporated the full amount of the profit realized in connection with the short-swing transaction, less transaction costs.

P/E: 16.89 Forward P/E: 14.79 Industry P/E: N/A
P/S: 1.47 Price/Book: 2.56 EV/EBITDA: 8.98
Market Cap: $3.66B Avg. Daily Volume: 249,082 52 Week Range: $37.98 – $61.63

5. Community Bank Shares of Indiana Inc. (CBIN): $9.35

Director Norman E Pfau Jr acquired 91,820 shares of this bank holding company, paying $8.52 per share for a total amount of $782,306.

This was an indirect purchase through Cake Holdings. Mr Pfau owns 80% of Cake Holdings. This Indiana based bank holding company for Your Community Bank and The Scott County State Bank reported earnings of $1.4 million or 42 cents in the third quarter, up 100% from Q3 2009. With a P/E of 5 and a Price/Book ratio of 0.6, this small bank holding company looks very attractively valued. The troubled asset ratio (TAR) for Scott County State Bank is 19.9 while the (TAR) for Your Community Bank is 24.40. With average daily volume of just 2,431 shares, starting or exiting a position might be challenging. The stock was up 10% on Thursday following this filing.

P/E: 5.59 Forward P/E: N/A Industry P/E: 15.98
P/S: 0.98 Price/Book: 0.66 EV/EBITDA: N/A
Market Cap: $30.77M Avg. Daily Volume: 2,454 52 Week Range: $6.5 – $10.5

Notable Insider Sales:

1. Cinemark Holdings Inc. (CNK): $17.54

Shares of this movie theatre company were sold by five insiders:

  • Director Vahe Dombalagian sold 1.5 million shares for $17.78 per share, generating a total amount of $26.67 million. This was an indirect sale through Madison Dearborn Capital Partners.
  • Chief Executive Officer Alan Stock sold 109,600 shares for $17.61 per share, generating a total amount of $1.9 million
  • Chief Financial Officer Robert Copple sold 87,500 shares for $17.61 per share, generating a total amount of $1.5 million
  • SVP – General Counsel Michael Cavalier sold 72,900 shares for $17.61 per share, generating a total amount of $1.3 million
  • SVP – Real Estate Tom Owens sold 4,353 shares for $17.76 per share, generating a total amount of $77,309
P/E: 13.34 Forward P/E: 12.35 Industry P/E: 20.37
P/S: 0.93 Price/Book: 2.03 EV/EBITDA: 7.14
Market Cap: $1.99B Avg. Daily Volume: 732,700 52 Week Range: $12.73 – $19.8

2. Bruker Corporation (BRKR): $17.39

Shares of this scientific & technical instruments company were sold by two insiders:

  • Director Dirk Laukien sold 926,900 shares for $16.98 per share, generating a total amount of $15.74 million
  • Director Joerg sold 926,900 shares for $16.98 per share, generating a total amount of $15.74 million
P/E: 26.27 Forward P/E: 19.99 Industry P/E: 24.54
P/S: 2.26 Price/Book: 5.77 EV/EBITDA: 12.65
Market Cap: $2.87B Avg. Daily Volume: 562,372 52 Week Range: $10.52 – $17.65

3. General Dynamics Corp. (GD): $70.28

Shares of this aerospace / defense products & services provider were sold by six insiders:

  • Director Nicholas Chabraja sold 350,000 shares for $70 per share, generating a total amount of $24.5 million
  • Vice President Thaer Lewis Von sold 33,579 shares for $69.43 per share, generating a total amount of $2.3 million. This sale was as a result of exercising options immediately prior to the sale.
  • Executive Vice President David Heebner sold 19,260 shares for $69.83 per share, generating a total amount of $1.3 million. This sale was as a result of exercising options immediately prior to the sale.
  • Vice President Mark Roualet sold 8,802 shares for $69 per share, generating a total amount of $607,338. This sale was as a result of exercising options immediately prior to the sale.
  • Director John Keane sold 4,300 shares for $70.08 per share, generating a total amount of $301,344. This sale was as a result of exercising options immediately prior to the sale.
  • Director George Joulwan sold 3,961 shares for $69.94 per share, generating a total amount of $277,032. This sale was as a result of exercising options immediately prior to the sale.
P/E: 10.86 Forward P/E: 9.91 Industry P/E: 18.44
P/S: 0.84 Price/Book: 1.96 EV/EBITDA: 6.28
Market Cap: $26.55B Avg. Daily Volume: 1,986,950 52 Week Range: $55.46 – $79

4. Dril-Quip, Inc. (DRQ): $77.22

Co-Chairman of the Board Larry Reimert sold 233,128 shares of this oil & gas equipment & services company for $81.11 per share generating a total amount of $18.9 million. 111,482 of these shares were sold as a result of exercising options immediately prior to the sale. The rest of them were sold indirectly through Reimert Family Partners, Ltd. Larry E. Reimert is managing general partner of Reimert Family Partners, Ltd.

P/E: 28.05 Forward P/E: 24.06 Industry P/E: 24.41
P/S: 5.53 Price/Book: 3.92 EV/EBITDA: 16.36
Market Cap: $3.08B Avg. Daily Volume: 425,049 52 Week Range: $40.38 – $83.8

5. Starwood Hotels & Resorts Worldwide Inc. (HOT): $59.75

CAO & General Counsel Kenneth Siegel sold 293,706 shares of this hotel and leisure company for $60.48 per share, generating a total amount of $17.76 million. 217,998 of these shares were sold as a result of exercising options immediately prior to the sale.

P/E: 355.65 Forward P/E: 38.3 Industry P/E: 26.67
P/S: 2.28 Price/Book: 5.52 EV/EBITDA: 19.05
Market Cap: $11.39B Avg. Daily Volume: 2,732,830 52 Week Range: $33.15 – $61.69
Source: Insider Buys and Sells: Lincoln Educational Services, Cinemark Holdings