We present here three noteworthy buys and eight noteworthy sells from Tuesday's (March 6, 2012) 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 380 separate transactions in over 210 different companies filed by insiders 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.
Pandora Media Inc. (P): Pandora is a premier provider of Internet radio in the U.S., offering listeners streaming music based on analysis of user listening behavior. Its services are offered on traditional computers and on smart phones such as Android phones, BlackBerrys and the iPhone. On Tuesday, two insiders filed SEC Forms 4 indicating that they sold 83,838 shares for $1.2 million, pursuant to 10b5-1 plans. The large majority of the sales were by EVP Jessica Steel (43,838 shares); and the remaining 40,000 shares, acquired by the exercise of options, were sold by Chief Revenue Officer John Trimble. Overall, insiders have sold 0.86 million shares since the expiry of the lock-up period for a vast majority of the company's outstanding shares last December.
Pandora just reported a disappointing Q4 yesterday evening, missing analyst earnings estimates by a penny (3c loss v/s 2c loss), and also missing on revenues ($81 million v/s $83 million) and guiding Q1 and FY2013 revenues and earnings lower. The stock gapped down 23% lower at the open, which would be expected on a disappointment for a "story" stock that trades at a hefty multiple to sales (8x prior to the Q4 report). The critical question for investors, however, is where does it go from here, and maybe even what implications does it have for its peer Sirius Satellite Radio (SIRI).
First off, the velocity of the drop today suggests that at least technically the stock will have a difficult time rallying in the absence of any new positive fundamental news. It is likely that the stock could bounce back to the $12-$13 resistance top; however in the intermediate-term it is probably more likely to test the $9-$10 support level. We believe that the support is most likely to hold and that shares may continue treading in the $10 to $14 range for a while as the underlying metrics are very positive. For example, year-over-year, the number of active users grew 62%, its total listener hours grew even faster at 99%, its share of the top 20 U.S. Internet radio services grew from 58% to 70%, and finally its share of total of U.S. radio listening more than doubled to 5.55% from 2.71%.
And as to implications for SIRI, despite the optimism of many SIRI bulls, Pandora's recent Q4 shortfall does not translate into any net positives for SIRI. Sirius's stock is up slightly today, by 4c, as of this writing, and is technically strong and ready to break-out to the upside. However, fundamentals do not support a significant rally on a break-out as long as quarterly earnings languish in the 1c-2c range. On a valuation basis, Pandora trades at 16.2 P/B and 6.4 PSR (price-to-sales ratio), while SIRI shares trade at 11.8 P/B and 2.8 PSR; however, revenue is much stronger at Pandora than at rival SIRI, at 71% v/s 7% for the latest quarter.
International Paper Co. (IP): IP is a paper and packaging company with worldwide operations, manufacturing containerboards, printing and writing papers, market pulp and coated paperboard. On Tuesday, three insiders filed SEC Forms 4 indicating that they exercised options to acquire 22,000 shares and sold those and an additional 54,849 shares for $2.7 million, with SVP Carleton Ealy accounting for the sale of 50,849 of those shares. Insider sales have picked up recently at IP with insiders selling a total of 0.34 million shares in the past three weeks for almost $12 million. In comparison, insiders sold only an additional 0.20 million shares in the past year.
IP reported a good Q4 last month, beating earnings (66c v/s 61c) and missing revenues ($6.37 billion v/s $6.52 billion). Its shares trade at 9-10 forward P/E and 2.2 P/B compared to averages of 10.6 and 4.0 for its peers in the paper and related products group, while earnings are projected to rise at a modest 7.0% annual growth rate from $3.10 in 2011 to $3.55 in 2013.
Sysco Corp. (SYY): SYY distributes food and related products to the food-service industry via 180 distribution centers in the U.S. and Canada. On Tuesday, EVP Michael Green filed SEC Form 4 indicating that he sold 25,000 shares for $0.74 million, ending with 45,157 shares after the sale. In comparison, insiders sold only an additional 13,579 shares in the past year. SYY narrowly beat revenue and earnings in its Q4 that it reported last month; the stock trades at a current 14.2 P/E on a TTM basis, and at 3.7 P/B, compared to averages of 16.4 and 2.6 for its peers in the wholesale food group.
On top of these, some additional large insider sales reported on Tuesday included:
- an $11.3 million sale by two insiders, pursuant to 10b5-1 plans, at Vera Bradley Inc. (VRA), engaged in the design, production, marketing and retail of functional accessories for women, including handbags, accessories, and travel and leisure items;
- a $5.7 million sale by CEO Marc Casper, pursuant to a 10b5-1 plan, at Thermo Fisher Scientific (TMO), a provider of analytical instruments, equipment, reagents and consumables, software, and services for research, manufacture, discovery and diagnostics;
- a $4.7 million sale by seven insiders at Saks Inc. (SKS), that operates a national fashion retail store chain in the U.S. that offer a range of luxury fashion apparel, shoes, accessories, jewelry, cosmetics, and gifts;
- a $1.6 million sale by four insiders, pursuant to 10b5-1 plans, at Solazyme Inc. (SZYM), engaged in the production of renewable oils from low-cost sugar feedstocks for use as fuels and chemicals, nutrition, and for skin and personal care; and
- a $1.3 million sale by SVP Michael Hemmer, pursuant to a 10b5-1 plan, at Union Pacific Corp. (UNP), a provider of rail transportation with 31,953 miles of main and branch line track across 23 states in the western U.S.
Furthermore, insiders also reported noteworthy buys on Tuesday in:
- United Bankshares Inc. (UBSI), a holding company for United Bank that operates via 112 offices in WV, VA, MD, OH and DC., in which Director Douglas Leech purchased 12,150 shares for $0.35 million;
- Chesapeake Midstream Partners LP (CHKM), an MLP principally focused on natural gas gathering, providing gathering, treating and compression services to its primary customer, corporate parent Chesapeake Energy Corp., in which CEO Michael Stice purchased 3,000 shares for $86,670; and
- Radian Group Inc. (RDN), that offers private mortgage insurance for homeowners that put down less than 20% down payment when purchasing their homes, and in addition, through its Financial Guaranty segment, it also insures and reinsures municipal bonds, structured finance transactions and other credit-based risks, as well as provides credit protection on various asset classes through financial guarantees and credit default swaps, in which two insiders purchased 18,600 shares for $67,224.
Credit: Fundamental data in this article were based on SEC filings, Zacks Investment Research, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.
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