Welcome to edition sixty three of Insider Weekends. Insider buying decreased with insiders purchasing $130.3 million of their stock last week when compared to $225.6 million in the week prior. Selling on the other hand increased with insiders selling $680.3 million worth of stock compared to $225.6 million in the week prior. The big increase in insider selling was driven by a $445 million sale of Plains All American Pipeline (PAA) by Microsoft co-founder Paul Allen in a secondary offering through his company Vulcan Energy Corporation. Taking out this sale, insider selling was almost flat last week.
Sell/Buy Ratio: The insider Sell/Buy ratio is calculated by dividing the total insider sales in a given week by total insider purchases that week. The adjusted ratio for last week went up to 5.2. In other words, insiders sold more than 5 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the week prior when the ratio stood at 1.27. 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 August 19, 2011:
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. Valeant Pharmaceuticals International, Inc. (VRX): $39.66
Shares of this pharmaceutical company were acquired by 2 insiders:
- Chief Executive Officer J. Michael Pearson acquired 155,642 shares, paying $38.62 per share for a total amount of $6.01 million. Mr. Pearson increased his stake by 2.87% to 5,570,503 shares with this purchase.
- President & COO Silva Rajiv De acquired 6,180 shares, paying $40.40 per share for a total amount of $249,666. Mr. De increased his stake by 2.62% to 241,758 shares with this purchase.
You can view the list of recent insider transactions for Valeant Pharmaceuticals International, Inc. here.
|P/E: N/A||Forward P/E: N/A||Industry P/E: 16.13|
|P/S: 6.24||Price/Book: 2.54||EV/EBITDA: 17.7|
|Market Cap: $11.91B||Avg. Daily Volume: 2,891,720||52 Week Range: $21.92 – $57.24|
2. Federal-Mogul Corp. (FDML): $14.87
Director Carl C. Icahn acquired 305,890 shares of this auto parts manufacturer, paying $16.73 per share for a total amount of $5.1 million. These shares were purchased indirectly by Icahn Enterprises Holdings.
Mr. Icahn continued buying shares of Federal-Mogul, adding to his $2.1 million purchase from the week prior.
We wrote the following regarding his purchase last week,
A few months ago, Mr. Icahn, who owns a majority stake in Federal-Mogul, was planning on selling his stake when the stock was trading at about $24. With the recent drop in the stock price, the company is trading just below book value and it is interesting to see him turn around and start buying stock on the open market. The company emerged out of bankruptcy in 2008 and has been performing quite well with both top and bottom line growth over the last several quarters. The company has a forward PE of just 5.67 but margins are slim, inventory has been growing and the company has $1.85 billion in net debt on the balance sheet.
This is the third purchase by Mr. Icahn who has recently benefited from Google’s decision to buying one of his portfolio companies Motorola Mobility (MMI). His purchases since the start of the month have totaled $7.2 million.
You can view the list of recent insider transactions for Federal-Mogul Corp. here.
|P/E: 6.95||Forward P/E: 5.72||Industry P/E: 9.29|
|P/S: 0.23||Price/Book: 1||EV/EBITDA: 5.21|
|Market Cap: $1.47B||Avg. Daily Volume: 196,339||52 Week Range: $14.11 – $27.2|
3. Clearwire Corporation (CLWR): $3.01
Chairman of the Board of Directors John W. Stanton acquired 2,755,000 shares of this wireless broadband services provider, paying $1.81 per share for a total amount of $4.9 million. Mr. Stanton increased his stake by 347.12% to 3,548,670 shares with this purchase. 275,500 of these shares were purchased indirectly by a trust.
This was an interesting purchase as it has been the first real insider purchase at Clearwire amid a sea of insider selling over the course of the last year as you can see from this page. The 22,000 share purchase by a director according to a March 2, 2011 filing was a late filing and that purchase took place in June, 2009. The stock lost more than two-third of its value over the last four months over concerns about its ability to pay back its debt, which has ballooned to over $4 billion.
The risk of Clearwire going under has dragged down Sprint’s (S) stock as well since Sprint depends on Clearwire to power its 4G WiMax based network. Speculation that Sprint may pay Clearwire as much as $1 billion over the next two years helped buoy the stock up 20% or 32 cents to $1.91 last week. The stock got some serious traction following this insider purchase and was up 64% over the next three trading sessions.
You can view the list of recent insider transactions for Clearwire Corporation here.
|P/E: N/A||Forward P/E: N/A||Industry P/E: 13.1|
|P/S: 0.64||Price/Book: 0.6||EV/EBITDA: -3.05|
|Market Cap: $747.99M||Avg. Daily Volume: 6,866,640||52 Week Range: $1.32 – $8.82|
4. Merck & Co. Inc. (MRK): $31.26
Shares of this pharmaceutical company were acquired by 2 insiders:
- President & CEO Kenneth C. Frazier acquired 32,000 shares, paying $31.78 per share for a total amount of $1.02 million. Mr. Frazier increased his stake by 19.94% to 192,520 shares with this purchase.
- Exe V-P & CFO Peter N. Kellogg acquired 15,800 shares, paying $31.80 per share for a total amount of $502,366. Mr. Kellogg increased his stake by 41.36% to 53,999 shares with this purchase.
This has been the only insider purchases at Merck over the last year. It is not often you come across the CEO and the CFO of a big pharma company buying their own stock on the open market. On a related note, Fortune Magazine has a great cover story about Pfizer and the breakdown of corporate governance at the company that is well worth the read.
You can view the list of recent insider transactions for Merck & Co. Inc. here.
|P/E: 33.69||Forward P/E: 8.14||Industry P/E: 14.35|
|P/S: 2.04||Price/Book: 1.73||EV/EBITDA: 6.08|
|Market Cap: $96.31B||Avg. Daily Volume: 15,063,100||52 Week Range: $29.47 – $37.68|
5. City Holding Co. (CHCO): $28.44
Shares of this regional bank were acquired by 2 insiders:
- Director John R. Elliot acquired 46,764 shares, paying $30.32 per share for a total amount of $1.4 million. Mr. Elliot increased his stake by 44.86% to 151,000 shares with this purchase.
- EVP Retail Banking Craig G. Stilwell acquired 1,000 shares, paying $28.73 per share for a total amount of $28,730. Mr. Stilwell increased his stake by 3.54% to 29,240 shares with this purchase.
You can view the list of recent insider transactions for City Holding Co. here.
|P/E: 11.52||Forward P/E: 11.07||Industry P/E: 14.85|
|P/S: 3.18||Price/Book: 1.41||EV/EBITDA: N/A|
|Market Cap: $429.02M||Avg. Daily Volume: 60,284||52 Week Range: $27.5 – $38.68|
You can view the full list of purchases from this Insider Buying page.
Notable Insider Sales:
1. OpenTable, Inc. (OPEN): $56.3
Shares of this restaurant reservation solutions provider were sold by 2 insiders:
- Director Jeffrey D. Jordan sold 104,000 shares for $62.37, generating $6.5 million from the sale. These shares were sold indirectly through trusts.
- Director Paul S. Pressler sold 2,000 shares for $65.00, generating $130,005 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
You can view the list of recent insider transactions for OpenTable, Inc. here.
|P/E: 70.82||Forward P/E: 32.54||Industry P/E: 18|
|P/S: 10.86||Price/Book: 10.62||EV/EBITDA: 36.36|
|Market Cap: $1.33B||Avg. Daily Volume: 1,398,780||52 Week Range: $39.32 – $118.66|
2. Tutor Perini Corporation (TPC): $12.91
Chairman & CEO Ronald N. Tutor sold 450,000 shares of this construction services company for $13.82, generating $6.2 million from the sale. These shares were sold indirectly through a trust.
You can view the list of recent insider transactions for Tutor Perini Corporation here.
|P/E: 8.07||Forward P/E: 5.38||Industry P/E: 14.04|
|P/S: 0.22||Price/Book: 0.46||EV/EBITDA: 4.91|
|Market Cap: $610.46M||Avg. Daily Volume: 422,223||52 Week Range: $11.71 – $26.87|
3. priceline.com Incorporated (PCLN): $448.95
Shares of this online travel company were sold by 4 insiders:
- Executive VP, General Counsel Peter J. Millones sold 6,000 shares for $503.49, generating $3.02 million from the sale.
- President and CEO Jeffery H. Boyd sold 2,000 shares for $502.57, generating $1 million from the sale.
- Director Jeffrey E. Epstein sold 2,000 shares for $504.04, generating $1 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
- Head of Worldwide Strategic & Planning Glenn D. Fogel sold 700 shares for $503.03, generating $352,121 from the sale.
You can view the list of recent insider transactions for priceline.com Incorporated here.
|P/E: 31.83||Forward P/E: 15.26||Industry P/E: 12.98|
|P/S: 6.26||Price/Book: 11.48||EV/EBITDA: 19.76|
|Market Cap: $22.34B||Avg. Daily Volume: 1,175,970||52 Week Range: $283.11 – $561.88|
4. The Scotts Miracle-Gro Co. (SMG): $44.86
CEO and Chairman James Hagedorn sold 97,201 shares of this agricultural chemicals company for $45.01, generating $4.4 million from the sale. These shares were sold indirectly by the Hagedorn Partnership, L.P.
You can view the list of recent insider transactions for The Scotts Miracle-Gro Co. here.
|P/E: 15.97||Forward P/E: 13.16||Industry P/E: 11.91|
|P/S: 0.91||Price/Book: 3.69||EV/EBITDA: 8.55|
|Market Cap: $2.82B||Avg. Daily Volume: 889,812||52 Week Range: $39.99 – $60.62|
5. Accretive Health, Inc. (AH): $24.99
Director Arthur H. Spiegel sold 141,931 shares of this healthcare services company for $28.63, generating $4.1 million from the sale.
You can view the list of recent insider transactions for Accretive Health, Inc. here.
|P/E: 147.87||Forward P/E: 34.71||Industry P/E: N/A|
|P/S: 3.77||Price/Book: 13.27||EV/EBITDA: 65.23|
|Market Cap: $2.44B||Avg. Daily Volume: 688,455||52 Week Range: $8.3 – $32.82|
You can view the full list of sales from this Insider Sales page.
Disclosure: I have a short position in OpenTable and am long one HTC Evo 3D phone by Sprint. See my portfolio holdings here.