Insider Weekends - January 29, 2016

|
Includes: BH, COST, CRM, DEI, GE, KEY, KMI, LM, PAHC, VGR
by: Asif Suria

Summary

Insider buying declined last week.

Notable insider buys this week: KMI, BH, LM, GE, and KEY.

Notable insider sales this week: COST, CRM, DEI, VGR, and PAHC.

Welcome to edition 293 of Insider Weekends. Insider buying declined last week with insiders buying $27.94 million of stock compared to $56.58 million in the week prior. Selling on the other hand increased with insiders selling $267.17 million of stock last week compared to $112.27 million in the week prior.

The S&P 500 rallied 1.75% last week after we saw insider selling drop to its lowest level in four years. While the rally was broad-based, we saw big increases in some long suffering energy names as you can see from the 34% gain in Consol Energy (NYSE:CNX) and the nearly 10% gain in Kinder Morgan (NYSE:KMI) in the chart below.

Click to enlarge

Consol Energy and KinderMorgan 1-Week Chart

Pull back the curtain a year and this rally pales in comparison as Consol is down nearly 74% and Kinder Morgan is down more than 60% despite the recent rally. We have highlighted insider purchases in both these names in the past. As is often the case with insiders and value investors, it was a case of "premature accumulation." Where we go from here is anyone's guess but the 9.38% drop in the S&P 500 doesn't even begin to paint the picture of how much some segments of the market like energy, commodities and young technology companies have dropped in the last six months. For the prudent investor who is willing to put in the time to do detailed bottoms-up analysis, there appear to be interesting opportunities amongst these beaten down names if you can navigate the dangerous currents of value traps masquerading as value stocks.

Click to enlarge

Consol Energy and Kinder Morgan 1-Year Chart

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 9.56. In other words, insiders sold almost 10 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 1.98. 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 January 29, 2016

Note: As mentioned in the first post in this series, 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. Kinder Morgan, Inc. (KMI): $16.45

Director Michael C. Morgan acquired 180,000 shares of this oil & gas pipelines company, paying $14.20 per share for a total amount of $2.56 million. These shares were purchased indirectly by Portcullis Partners, LP.

You can view the list of recent insider transactions for Kinder Morgan, Inc. here.

P/E: 117.5 Forward P/E: 20.06 Industry P/E: 18.25
P/S: 2.37 Price/Book: 0.97 EV/EBITDA: 11.69
Market Cap: $36.71B Avg. Daily Volume: 43,519,600 52-Week Range: $11.2-$44.71
Click to enlarge

2. Biglari Holdings Inc. (NYSE:BH): $378.18

Chairman and CEO Sardar Biglari acquired 6,949 shares of this restaurant holding company, paying $360.82 per share for a total amount of $2.51 million. These shares were purchased indirectly by The Lion Fund.

You can view the list of recent insider transactions for Biglari Holdings Inc. here.

P/E: 1.86 Forward P/E: 29.55 Industry P/E: 22.98
P/S: 0.82 Price/Book: 1.59 EV/EBITDA: 15.58
Market Cap: $781.70M Avg. Daily Volume: 4,018 52-Week Range: $321-$459.43
Click to enlarge

3. Legg Mason Inc. (NYSE:LM): $30.62

Shares of this asset management holding company were acquired by 6 insiders:

  • Chairman, President & CEO Joseph A. Sullivan acquired 25,000 shares, paying $29.81 per share for a total amount of $745,250. Mr. Sullivan increased his stake by 9.43% to 289,989 shares with this purchase.
  • Exec VP & CFO Peter Nachtwey acquired 20,000 shares, paying $29.92 per share for a total amount of $598,400. Mr. Nachtwey increased his stake by 22.42% to 109,215 shares with this purchase.
  • Director W. Allen Reed acquired 10,000 shares, paying $29.68 per share for a total amount of $296,800. Mr. Reed increased his stake by 29.57% to 43,813 shares with this purchase.
  • Director John V. Murphy acquired 5,000 shares, paying $29.74 per share for a total amount of $148,700. Mr. Murphy increased his stake by 39.35% to 17,707 shares with this purchase.
  • Director Dennis M. Kass acquired 3,500 shares, paying $29.80 per share for a total amount of $104,300. Mr. Kass increased his stake by 16.76% to 24,378 shares with this purchase.
  • Director John H. Myers acquired 2,000 shares, paying $29.77 per share for a total amount of $59,540. Mr. Myers increased his stake by 15.14% to 15,207 shares with this purchase.

You can view the list of recent insider transactions for Legg Mason Inc. here.

P/E: 33.76 Forward P/E: 10.97 Industry P/E: 12.77
P/S: 1.15 Price/Book: 0.71 EV/EBITDA: 5.49
Market Cap: $3.30B Avg. Daily Volume: 1,364,810 52-Week Range: $29.33-$59.19
Click to enlarge

4. General Electric Company (NYSE:GE): $29.1

Senior Vice President Alexander Dimitrief acquired 65,272 shares of General Electric, paying $28.04 per share for a total amount of $1.83 million. These shares were purchased indirectly through a 401(k) Plan.

You can view the list of recent insider transactions for General Electric Company here.

P/E: N/A Forward P/E: 16.44 Industry P/E: 17.29
P/S: 2.34 Price/Book: 2.8 EV/EBITDA: 29.69
Market Cap: $274.64B Avg. Daily Volume: 90,622,300 52-Week Range: $19.37-$31.49
Click to enlarge

5. KeyCorp. (NYSE:KEY): $11.16

Shares of this regional bank were acquired by 9 insiders:

  • Chairman and CEO Beth E. Mooney acquired 20,000 shares, paying $11.22 per share for a total amount of $224,400. Ms. Mooney increased her stake by 4.21% to 494,861 shares with this purchase.
  • Director Charles P. Cooley acquired 15,000 shares, paying $10.95 per share for a total amount of $164,250. Mr. Cooley increased his stake by 300.00% to 20,000 shares with this purchase.
  • Director Alexander M. Cutler acquired 15,000 shares, paying $11.21 per share for a total amount of $168,150. Mr. Cutler increased his stake by 75.00% to 35,000 shares with this purchase.
  • Director William G. Gisel Jr. acquired 13,000 shares, paying $10.86 per share for a total amount of $141,180. Mr. Gisel increased his stake by 265.31% to 17,900 shares with this purchase.
  • Director Ruth Ann Gillis acquired 12,900 shares, paying $11.04 per share for a total amount of $142,416. These shares were purchased indirectly through a trust.
  • Director H. James Dallas acquired 12,900 shares, paying $11.21 per share for a total amount of $144,609. Mr. Dallas increased his stake by 35.24% to 49,508 shares with this purchase.
  • Director Bruce D. Broussard acquired 10,000 shares, paying $10.90 per share for a total amount of $109,000.
  • Director Richard J. Hipple acquired 10,000 shares, paying $11.10 per share for a total amount of $111,000. Mr. Hipple increased his stake by 317.97% to 13,145 shares with this purchase.
  • Director David K. Wilson acquired 4,000 shares, paying $11.01 per share for a total amount of $44,040. Mr. Wilson increased his stake by 266.67% to 5,500 shares with this purchase.

You can view the list of recent insider transactions for KeyCorp. here.

P/E: 10.62 Forward P/E: 7.97 Industry P/E: 13.34
P/S: 2.28 Price/Book: 0.89 EV/EBITDA: N/A
Market Cap: $9.33B Avg. Daily Volume: 16,844,600 52-Week Range: $10.78-$15.7
Click to enlarge

You can view the full list of purchases from this Insider Buying page.

Notable Insider Sales:

1. Costco Wholesale Corporation (NASDAQ:COST): $151.12

Director James D. Sinegal sold 44,125 shares of this warehouse retailer for $151.97, generating $6.71 million from the sale.

You can view the list of recent insider transactions for Costco Wholesale Corporation here.

P/E: 28.3 Forward P/E: 24.33 Industry P/E: 24.87
P/S: 0.56 Price/Book: 6.06 EV/EBITDA: 13.91
Market Cap: $66.46B Avg. Daily Volume: 2,337,520 52-Week Range: $117.03-$169.73
Click to enlarge

2. salesforce.com, inc. (NYSE:CRM): $68.06

Shares of this software-as-a-service (SAAS) provider were sold by 5 insiders:

  • Chairman of the Board & CEO Marc Benioff sold 62,500 shares for $68.39, generating $4.27 million from the sale.
  • Chief Financial Officer Mark J. Hawkins sold 8,625 shares for $70.00, generating $603,750 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Co-Founder Parker Harris sold 5,000 shares for $69.77, generating $348,872 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Pres., Sales & Cust. Success Maria Martinez sold 3,028 shares for $66.74, generating $202,088 from the sale. 501 of these shares were sold as a result of exercising options immediately prior to the sale.
  • Director John Victor Roos sold 267 shares for $69.96, generating $18,679 from the sale.

You can view the list of recent insider transactions for salesforce.com, inc. here.

P/E: N/A Forward P/E: 68.75 Industry P/E: 32.29
P/S: 6.92 Price/Book: 9.18 EV/EBITDA: 114.8
Market Cap: $45.19B Avg. Daily Volume: 3,987,970 52-Week Range: $55.45-$82.9
Click to enlarge

3. Douglas Emmett Inc. (NYSE:DEI): $29.58

Chairman of the Board Dan A. Emmett sold 140,000 shares of this apartment REIT for $27.93, generating $3.91 million from the sale. These shares were sold indirectly through a trust.

You can view the list of recent insider transactions for Douglas Emmett Inc here.

P/E: 82.86 Forward P/E: 17.3 Industry P/E: 14.24
P/S: 6.71 Price/Book: 2.2 EV/EBITDA: 21.13
Market Cap: $4.34B Avg. Daily Volume: 909,131 52-Week Range: $26.67-$32.32
Click to enlarge

4. Vector Group Ltd. (NYSE:VGR): $23.32

Director Bennett S. LeBow sold 100,000 shares of this cigarettes company for $22.65, generating $2.27 million from the sale. These shares were sold indirectly by LeBow Epsilon 2001 Limited Partnership.

You can view the list of recent insider transactions for Vector Group Ltd. here.

P/E: 44.67 Forward P/E: 29.15 Industry P/E: 19.16
P/S: 2.32 Price/Book: N/A EV/EBITDA: 12.35
Market Cap: $2.86B Avg. Daily Volume: 664,514 52-Week Range: $19.64-$25.6
Click to enlarge

5. Phibro Animal Health Corporation (NASDAQ:PAHC): $33.55

Shares of this diversified animal health and mineral nutrition company were sold by 3 insiders:

  • President and CEO Jack Bendheim sold 39,944 shares for $32.10, generating $1.28 million from the sale. These shares were sold indirectly by BFI Co., LLC.
  • Chief Operating Officer Gerald K. Carlson sold 12,923 shares for $32.13, generating $415,216 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Sr VP, Human Resources Daniel A. Welch sold 3,000 shares for $32.05, generating $96,150 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 Phibro Animal Health Corporation here.

P/E: 22.35 Forward P/E: 17.75 Industry P/E: 21.31
P/S: 1.67 Price/Book: 55.33 EV/EBITDA: 15.22
Market Cap: $1.31B Avg. Daily Volume: 212,502 52-Week Range: $25.77-$40.54
Click to enlarge

You can view the full list of sales from this Insider Sales page.

Disclaimer: Clients of Signal Partners, LLC and I may have positions in any of these stocks at any time. Please do your own due diligence before buying or selling any securities mentioned in this article. We do not warrant the completeness or accuracy of the content or data provided in this article.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.