We present here four noteworthy buys and eleven noteworthy sells from Tuesday's SEC Form 4 (insider trading) filings, as part of our daily and weekly coverage of insider trades. These were selected by a review of over 415 separate transactions in over 250 different companies that were filed with the SEC on Tuesday. The filings are noteworthy based on the dollar amount sold, the number of insiders buying or selling, and based on whether the overall buying or selling represents a strong pick-up based on historical buying and selling in the stock (for more info on how to interpret insider trades, please refer to the end of this article):
Ford Motor (F): Ford manufactures automobiles under the Ford and Lincoln nameplates, offers a wide range of after-sales vehicle services and products, and also offers vehicle financing, leasing and insurance services. On Tuesday, Group Vice President Nicholas Smither filed SEC Form 4 indicating that he exercised options to acquire 93,117 shares and sold those and an additional 78,516 shares for $2.2 million, ending with just over 131,000 shares in direct and indirect holdings (not including derivative holdings). In comparison, Ford insiders sold a total of 0.76 million shares in the past year.
Ford late last month, on January 27, reported a disappointing Q4, missing analyst earnings estimates (20 cents vs 26 cents); its shares trade at a current 6.4 P/E and 8.0 P/B compared with averages of 11.1 and 4.2 for its peers in the domestic auto group. The group overall is performing well, increasing its U.S. market share, year-over-year, for the first time since 1988, partly on account of the Japanese tsunami, but also on account of the popularity of new domestic fuel-efficient cars such as the Chevy Cruze and the Ford Fiesta.
XL Group Plc (XL): XL offers insurance and reinsurance to industrial and service firms and insurance companies worldwide. On Tuesday, two insiders filed SEC Forms 4 indicating that they purchased a total of 37,775 shares for $0.75 million; the buyers being CEO Michael McGavick (25,115 shares) and CFO Peter Porrino (12,660 shares). In comparison, insiders purchased a total of just 44,775 shares in the past year. XL trades at a forward 9-10 P/E and 0.6 P/B compared with averages of 13.8 and 1.8 for its peers in the property & casualty insurance group.
HCP Inc. (HCP): HCP is a REIT that invests in healthcare-related real estate located throughout the U.S., including long-term care facilities, congregate care and assisted living facilities, acute care and rehabilitation hospitals, medical office buildings, physician group practice clinics, and psychiatric facilities. On Tuesday, five insiders filed SEC Forms 4 indicating that they sold a total of 0.50 million shares for $20.2 million. A large majority of the shares (417,620) were sold by Chairman and CEO James Flaherty, pursuant to a 10b5-1 plan, with 399,220 of those shares acquired by the exercise of options. In comparison, insiders sold a total of 2.3 million shares in the past year. HCP reported a good Q4 just last Tuesday, with FFO of 67cents beating estimates by 1 cent, and revenue also coming in above estimates ($462 million vs $451 million). Its shares trade at a forward price-to-funds-from-operations (P/FFO) ratio of 13.6, and at 1.8 P/B, compared with averages of 12.6 and 1.5 for its peers in the REIT Equity Trust group. Also, it has a dividend yield of 5.0% compared to the 4.2% average for the group.
P/FFO is a more appropriate measure of value, commonly used in the REIT group, as it adds back in depreciation expenses that are typically taken out in calculating net income and earnings. This is because real estate, unlike fixed PP&E costs in the case of other groups, rarely loses value over the long term, and in fact, most often appreciates over the long term. So, in this case spreading out the investment cost in PP&E (in this case, mostly real estate) charges over the long term makes little sense as is done in calculating net income; hence, depreciation is added back in and the resulting FFO is a more appropriate measure of the cash flows than is earnings.
MetLife Inc. (MET): MET offers life, non-medical health, auto and home-owners insurance, annuities and financial services. On Tuesday, three insiders filed SEC Forms 4 indicating that they exercised options and sold the resulting total of 66,000 shares for $2.55 million. The sellers included President of the Americas (38,200 shares), EVP Maria Morris (20,000 shares), and CFO Eric Steigerwalt (7,800 shares). In comparison, insiders sold a total of 0.27 million shares in the past year. MET has a dividend yield of 1.9% versus the 1.9% average for its peers in the multi-line insurance group, and it also trades at discount 6-7 forward P/E versus the 10.1 average for the group.
National Oilwell Varco (NOV): NOV is engaged in the manufacture and sale of equipment, components and products used in oil and gas drilling and production, it provides oilfield services and supplies, and it distributes products and provides supply chain integration services to the upstream oil and gas industry worldwide. On Tuesday, two insiders filed SEC Forms 4 indicating that they exercised options and sold the resulting total of 0.15 million shares for $12.3 million, with the large majority of the shares (133,334) sold by CEO Merrill Miller. This is in addition to the 151,295 shares sold for $12.7 million that insiders filed on just last Friday, so that in total insiders reported selling a total of 0.28 million shares in the past two trading days. In comparison, insiders sold a total of 0.51 million shares in the past year.
NOV reported its Q4 just two weeks ago, beating analyst revenue ($4.26 billion vs $4.03 billion) and earnings ($1.37 vs $1.30) estimates, and was subsequently upgraded by Morgan Stanley and Global Hunter; currently, the stock trades at 12-13 forward P/E and 1.8 P/B compared with averages of 12.9 and 2.3 for its peers in the oil field machinery and equipment group.
On top of these, some additional large insider sales reported on Tuesday included:
- a $27.7 million sale by two insiders at real estate information marketplace Zillow Inc. (Z), including 510,400 shares sold by Vice-Chairman Lloyd Frink, pursuant to a 10b5-1 plan, and the remaining 375,000 shares sold by Executive Chairman Richard Barton;
- a $3.3 million sale by two insiders at Illinois Tool Works Inc. (ITW), a manufacturer of plastic and metal fasteners and fastening tools for the construction, automotive, and appliance markets, with the majority of the sales (55,348 shares out of 58,362 shares) by Chairman & CEO David Speer;
- a $2.0 million sale by Chairman & CEO Richard Fain at Royal Caribbean Cruises (RCL) that operates in the cruise vacation industry in North America and internationally, and owns five cruise brands, namely, Royal Caribbean International, Celebrity Cruises, Azamara Cruises, Pullmantur and CDF Croisieres de France;
- a $1.9 million sale by three insiders at 3M Co. (MMM), a provider of industrial tapes and adhesives, medical supplies, office products, surveillance and communications products;
- a $1.6 million sale by EVP Richard Bowles at Merck & Co. (MRK), a research-driven global pharmaceutical company engaged in developing prescription drugs to treat asthma, osteoporosis, cardiovascular, metabolic and other disorders;
- a $1.5 million sale by Director Jackie Ward at Wellpoint Inc. (WLP), a provider of managed healthcare services through PPO, HMO and POS, indemnity and other hybrid plans to 33.3 million members; and
- a $1.0 million sale by two insiders at Skyworks Solutions Inc. (SWKS), the industry's leading wireless semiconductor company focused on radio frequency and semiconductor solutions for mobile communications applications.
Furthermore, insiders also reported noteworthy buys on Friday in:
- global diversified media holding company Time Warner Inc. (TWX), in which Director William Barr purchased 2,624 shares for $99,538;
- Powerwave Technologies Inc. (PWAV), a manufacturer of antennas, boosters, combiners, cabinets, shelter and filters for wireless telecom networks worldwide, in which Director Carl Neun purchased 50,000 shares for $66,250;
- Mad Catz Interactive Inc. (MCZ), a leading third-party provider of accessories for all three major video game platforms: the Sony PlayStation®, Microsoft Xbox®, and Nintendo Wii®, in which two insiders purchased 83,520 shares for $45,276;
Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are our 'opinions' and we may be wrong. We may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to our thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.