Welcome to edition twenty nine of Insider Weekends. Insider buying increased significantly last week with insiders purchasing $126.08 million of their stock when compared to $46.75 million in the week prior. A big part of this increase was on account of Michael Dell’s $100 million purchase of Dell (DELL). Selling dropped significantly with insiders selling $730.96 million worth of stock when compared to $2.48 billion in the week prior.
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 plunged to 5.8. In other words, insiders sold almost 6 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the week prior when the ratio stood at 53.03. 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.
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. Dell Inc. (DELL): $13.79
Chairman & CEO Michael Dell acquired 7.37 million shares of this personal computers company, paying $13.57 per share for a total amount of $100 million. Mr. Dell increased his stake by 3.27% to 232.9 million shares.
This is the largest purchase on record by Mr. Dell in terms of number of shares acquired. He also acquired nearly $100 million worth of stock in July 2008 for an average price of around $22 and then once again another $100 million worth of stock in September 2008 for an average price of around $20.50. The stock went on to lose more than half its value from those levels when it hit a low of $11.34 this year. This once high growth stock is now firmly in value territory with a EV/EBITDA of just 4.57 and a single digit forward P/E.
The decline in revenue the company saw in fiscal 2010 ended January 2010, appears to be arrested and the company is on track to post a full year increase in both revenue and net income. Net income has been increasing for the last three quarters as well. The company has nearly $3.8 worth of cash on its balance sheet net of debt.
While the company appears to have returned to growth, the erosion of market share to companies like Apple on the high end and Acer on the low end may be difficult to reverse.
|P/E: 13.26||Forward P/E: 9.26||Industry P/E: 21.46|
|P/S: 0.44||Price/Book: 3.93||EV/EBITDA: 4.57|
|Market Cap: $26.62B||Avg. Daily Volume: 23,063,400||52 Week Range: $11.34 – $17.52|
2. Medtronic, Inc. (MDT): $36.96
Director Jack Schuler acquired 100,000 shares of this medical equipment company, paying $37.06 per share for a total amount of $3.7 million. Mr Schuler increased his stake by 25.66% to 489,781 shares with this purchase.
This is a large direct purchase both in terms of the dollar amount and the increase in Mr. Schuler’s stake. Mr. Schuler also picked up $1.1 million worth of stock in June and another director purchased $108,815 worth of stock in July. Two SVPs sold stock from January through April when the stock was trading at around $45.
|P/E: 12.77||Forward P/E: 10.07||Industry P/E: 27.23|
|P/S: 2.51||Price/Book: 2.67||EV/EBITDA: 8.18|
|Market Cap: $39.68B||Avg. Daily Volume: 7,088,830||52 Week Range: $30.8 – $46.66|
3. ChinaCast Education Corporation (CAST): $7.36
Director Ned Sherwood acquired 400,000 shares of this education and training services provider, paying $7.10 per share for a total amount of $2.8 million.
These shares were purchased indirectly by MRMP Managers LLC in a trust for the benefit of Mr Sherwood’s children. The company posted sharp growth in both revenue and earnings YoY as well on a sequential quarter basis. Profit margins of 27% are also very strong. It is surprising to see a high growth and high margin company selling at a reasonable valuation with a trailing P/E of 18, a forward P/E of 15 and Price/FCF of 8.31.
|P/E: 18.26||Forward P/E: 14.72||Industry P/E: 18.55|
|P/S: 5.3||Price/Book: 1.34||EV/EBITDA: N/A|
|Market Cap: $366.37M||Avg. Daily Volume: N/A||52 Week Range: $3.83 – $9.1|
4. General American Investors Company, Inc. (GAM): $26.71
Shares of this publicly owned investment manager were purchased by two insiders:
- Director Daniel Neidich acquired 37,400 shares, paying $26.36 per share for a total amount of $985,700.
- President & CEO Spencer Davidson acquired 600 shares, paying $24.85 per share for a total amount of $14,910. Mr Davidson increased his stake by 30.91% to 2,541 shares with this purchase.
|P/E: 12.63||Forward P/E: N/A||Industry P/E: N/A|
|P/S: 47.64||Price/Book: 0.92||EV/EBITDA: N/A|
|Market Cap: $807.50M||Avg. Daily Volume: 59,800||52 Week Range: $20.78 – $26.89|
5. Mesa Laboratories Inc. (MLAB): $27
Director Evan Guillemin acquired 40,000 shares of this medical instruments & supplies company, paying $24.75 per share for a total amount of $990,000. Mr Guillemin increased his stake by 26.67% to 190,000 shares with this purchase.
|P/E: 17.03||Forward P/E: N/A||Industry P/E: 19.97|
|P/S: 3.26||Price/Book: 2.61||EV/EBITDA: 9.12|
|Market Cap: $87.24M||Avg. Daily Volume: 1,722||52 Week Range: $19.46 – $29|
Notable Insider Sales:
1. BroadSoft, Inc. (BSFT): $26.04
Shares of this VOIP application software company were sold by 5 insiders:
- Director Joseph Zell sold 989,885 shares for $20.90, generating a total amount of $20.69 million.
- Director Robert Goodman sold 174,317 shares for $20.90, generating a total amount of $3.64 million.
- President & CEO Michael Tessler sold 135,000 shares for $20.90, generating a total amount of $2.82 million.
- Chief Technology Officer Scott Hoffpauir sold 89,228 shares for $20.90, generating a total amount of $1.86 million.
- CFO James Albert Tholen sold 33,250 shares for $20.90, generating a total amount of $694,925.
The exact same selling price is usually indicative of a secondary stock offering and this situation was no different. These sales were part of a common stock offering with the company selling half a million shares and shareholders selling 4.8 million shares. Mr. Zell’s shares were sold indirectly through Grotech Partners VI, L.P.
354 of Mr. Goodman’s shares were sold indirectly through Deer Management Co. LLC and the rest were sold through Cove Ventures LLC.
|P/E: N/A||Forward P/E: 46.5||Industry P/E: N/A|
|P/S: 8.21||Price/Book: 21.43||EV/EBITDA: 330.48|
|Market Cap: $644.28M||Avg. Daily Volume: 297,405||52 Week Range: $7.34 – $27.19|
2. Weyerhaeuser Co. (WY): $18.56
Director John Kieckhefer sold 1.38 million shares of this timber real estate investment trust (REIT) for $18.47, generating a total amount of $25.54 million. These shares were sold indirectly from family trusts.
|P/E: 4.74||Forward P/E: 31.46||Industry P/E: 64.54|
|P/S: 1.56||Price/Book: 2.14||EV/EBITDA: 16.47|
|Market Cap: $9.95B||Avg. Daily Volume: 4,706,210||52 Week Range: $15.06 – $53.69|
3. WESCO International Inc. (WCC): $52.77
Shares of this industrial equipment company were sold by 3 insiders:
- Executive Chairman Roy Haley sold 250,000 shares for $52.96, generating a total amount of $13.24 million.
- SVP & COO Stephen Van Oss sold 11,000 shares for $51.98, generating a total amount of $571,770. This sale was as a result of exercising options immediately prior to the sale.
- Director George Miles sold 5,000 shares for $52.39, generating a total amount of $261,950. This sale was as a result of exercising options immediately prior to the sale.
|P/E: 22.96||Forward P/E: 15.71||Industry P/E: 18.6|
|P/S: 0.46||Price/Book: 2.06||EV/EBITDA: 12.93|
|Market Cap: $2.24B||Avg. Daily Volume: 616,860||52 Week Range: $26.91 – $53.2|
4. Federated Investors, Inc. (FII): $26.23
Shares of this asset management company were sold by 2 insiders:
- Vice Chairman & Exec VP John McGoningle sold half a million shares for $26.57, generating a total amount of $13.28 million. These shares were sold indirectly through Fairview Partners, L. P.
- Executive Director, International Distribution, Gordon Ceresino sold 7,000 shares for $26.58, generating a total amount of $186,060.
|E: 14.78||Forward P/E: 14.65||Industry P/E: 16.56|
|P/S: 2.84||Price/Book: 6.09||EV/EBITDA: 8.37|
|Market Cap: $2.70B||Avg. Daily Volume: 1,083,840||52 Week Range: $20.01 – $28.31|
5. Accenture plc (ACN): $48.34
Shares of this management and IT services company were sold by 2 insiders:
- Chairman and CEO William Green sold 160,000 shares for $48.64, generating a total amount of $7.78 million.
- Chief Strategy & Corporate Development Officer Karl Heinz Flother sold 100,000 shares for $48.64, generating a total amount of $4.86 million.
|P/E: 18.17||Forward P/E: 13.77||Industry P/E: 21.21|
|P/S: 1.34||Price/Book: 10.72||EV/EBITDA: 7.59|
|Market Cap: $30.64B||Avg. Daily Volume: 4,161,960||52 Week Range: $17.74 – $51.43|