Analyzing Thursday's Noteworthy Insider Buys And Sells

by: GuruFundPicks

We present here five noteworthy buys and six noteworthy sells from Thursday's (March 8th, 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 360 separate transactions in over 190 different companies filed by insiders on Thursday. 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):

Dell Inc. (NASDAQ:DELL): Dell provides desktop PCs, mobility products, servers and networking products to individuals, businesses and governments. On Thursday, President Stephen Felice filed SEC Form 4 indicating that he exercised options to acquire 213,526 shares and sold those and an additional 200,000 shares for $7.0 million, ending with 0.3 million shares (not including derivative holdings). This is in addition to the sale of 477,153 shares by Mr. Felice that we reported on just at the end of last month. Insider selling has recently picked up at DELL with 1.41 million shares being reported sold by five insiders in the last two weeks. In comparison, insiders reported selling only an additional 1.1 million shares in the prior 50 weeks of the past year.

Dell shares have responded well this year to the company's strategy of expanding outside its core PC business into enterprise IT systems, in its attempt to take head-on rivals International Business Machines (NYSE:IBM) and Hewlett-Packard Co.'s (NYSE:HPQ) leadership in the higher-margin IT hardware, software and services businesses. Dell's Founder, Chairman & CEO Michael Dell was recently in Beijing, declaring "We're not a PC company" while unveiling new commercial network servers in China, in an attempt to re-brand worldwide Dell's image among corporate customers.

Dell shares are up about 15% YTD, trading near the top of a three-and-a-half year trading range. However, the stock may be being held back due to recent lackluster financial results, as in its Q4 released over two weeks ago, Dell missed on earnings (51 cents vs. 52 cents) and guided FY13 revenue below and EPS above consensus. A number of brokers downgraded the stock on the earnings miss and weak guidance, and its shares are currently slightly lower after the report, trading at 8 forward P/E and 3.5 P/B compared with averages of 8.4 and 4.2 for its peers in the micro-computer group. Earnings are projected to rise modestly from $2.13 in 2012, to $2.18 in 2014.

Akamai Technologies Inc. (NASDAQ:AKAM): Akamai is a global provider of services that help enterprises and e-businesses improve the delivery of their content and applications over the Internet. On Thursday, CEO Paul Sagan filed SEC Form 4 indicating that he exercised options and sold the resulting 50,000 shares for $1.8 million, pursuant to a 10b5-1 plan. Insider selling has picked up recently at AKAM, as insiders have reported selling over 214,000 shares in the past month. In comparison, insiders sold only an additional 18,000 shares in the past year.

AKAM released a surprisingly strong Q4 in early February, with earnings (45 cents vs. 40 cents) and revenue ($324 million v/s $311 million) trouncing estimates. The stock is up since the report, and trades at a reasonable 19-20 forward P/E and 3.2 P/B compared with averages of 27.2 and 3.3 for its peers in the internet services group.

Illinois Tool Works Inc. (NYSE:ITW): ITW is a manufacturer of plastic and metal fasteners and fastening tools for the construction, automotive, and appliance markets. On Thursday, Director Robert McCormack filed SEC Form 4 indicating that he sold 128,500 shares for $6.9 million, ending with about 8.9 million shares after the sale. In comparison, insiders sold 0.65 million shares in the past year. ITW trades at 12 forward P/E and 2.7 P/B compared with averages of 12.8 and 2.6 for its peers in the general industrial machinery group.

Spectra Energy Corp. (NYSE:SE): Spectra is engaged in the gathering, processing, transmission, storage and distribution of natural gas in the U.S. and Canada. On Thursday, Group VP William Yardley filed SEC Form 4 indicating that he exercised options to acquire 5,050 shares and sold those and an additional 10,000 shares for $0.47 million, ending with 38,993 shares after the sale (not including derivative holdings). In comparison, insiders sold 0.14 million shares in the past year. Spectra shares trade at a discount 15-16 forward P/E and 2.3 P/B compared with averages of 18.2 and 2.2 for its peers in the oil & gas transportation & pipeline group, and it has a dividend yield of 3.5% compared with the 5.6% average for the group.

On top of these, some additional large insider sales reported on Thursday included:

  • a $7.0 million sale by two insiders at Crown Castle International Corp. (NYSE:CCI), that operates wireless towers in the U.S., Australia, and Puerto Rico for wireless service providers;
  • a $1.0 million sale by CEO Scott Huennekens, pursuant to a 10b5-1 plan, at Volcano Corp. (NASDAQ:VOLC), a developer of intravascular ultrasound and functional measurement products for the diagnosis and treatment of vascular and structural heart disease worldwide;

Furthermore, insiders also reported noteworthy buys on Thursday in:

  • Stone Energy Corp. (NYSE:SGY), an independent oil & natural gas company headquartered in Lafayette, LA, that is engaged in the acquisition, exploitation and operation of oil & gas properties located in the Gulf Coast Basin, in which Director Phyllis Taylor purchased 16,700 shares for $0.5 million;
  • specialty pharmaceutical company Valeant Pharmaceuticals International Inc. (NYSE:VRX), in which CFO Howard Schiller purchased 9,200 shares for $0.49 million;
  • integrated oil & gas company Hess Corp. (NYSE:HES), in which ten insiders purchased 3,870 shares for $0.25 million;
  • United Bankshares Inc. (NASDAQ:UBSI), a holding company for United Bank that operates via 112 offices in WV, VA, MD, OH and DC., in which Director Robert Astorg purchased 4,200 shares for $0.12 million; and
  • Taser International (NASDAQ:TASR), a developer of less-than-lethal electronic control devices or ECDs for use in the law enforcement, military, corrections, private security and personal defense markets, in which General Manager Jason Droege purchased 18,000 shares for $73,190.

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

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.

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