Analyzing Noteworthy Insider Buys And Sells From Friday And Today

by: GuruFundPicks

We present here five noteworthy buys and seven noteworthy sells from Friday's and Today's (March 9 and 12, 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 240 separate SEC Form 4 transactions filed by insiders on Friday and today so far. 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):

American Eagle Outfitters (NYSE:AEO): AEO is an apparel and accessories retailer that operates over a thousand American Eagle Outfitters, Aerie standalone, and 77Kids stores in the U.S. and Canada. On Friday, two insiders filed SEC Forms 4 indicating that they sold 125,646 shares for $2.0 million. Of these, EVP Thomas DiDonato exercised options and sold the resulting 118,196 shares, ending with 21,207 shares after the sale (not including derivative holdings). In comparison, insiders sold 0.13 million shares in the past year.

AEO reported disappointing Q4 numbers last Wednesday, missing on both earnings (34 cents vs 36 cents) and revenue ($1.04 billion vs $1.05 billion), and guiding lower; the stock, however, has surged since the report buoyed by upgrades from brokers, including Nomura, Goldman, and FBR Capital. Goldman, in particular, pointed to improving margins, led by its teen segment, and a strategic improvement in inventory, and upgraded the stock to a Conviction Buy with a $19 price target. AEO shares currently trade at a discount 13-14 forward P/E and 2.2 P/B compared with averages of 16.3 and 3.1 for its peers in the apparel and shoe retail group, while earnings are projected to rise from 86 cents in 2012 to $1.23 in 2014.

Home Depot Inc. (NYSE:HD): HD operates as a home improvement retailer, selling a broad range of building materials, home improvement products, and lawn and garden products to do-it-yourself, do-it-for-me and professional customers via 2,248 stores in the U.S, Canada, Mexico, and China. On Friday, Chairman & CEO Francis Blake filed SEC Form 4 indicating that he exercised options and sold the resulting 350,000 shares for $16.7 million, ending with 0.63 million shares in direct and indirect holdings after the sale (not including derivative holdings). In comparison, insiders at HD sold only an additional 223,050 shares in the past year. HD trades at a discount 15 forward P/E and 4.1 P/B compared with averages of 17.2 and 2.6 for its peers in the building products retail and wholesale group, while earnings are projected to rise at a 14.2% compound growth rate from $2.47 in FY ending January 2012 to $3.22 in FY ending January 2014.

Hollyfrontier Corp. (NYSE:HFC): HFC is an independent petroleum refiner and marketer in the U.S., that is engaged in the production of high value light petroleum products such as gasoline, diesel fuel, jet fuel, and other specialty products. On Friday, Executive Chairman Matthew Clifton filed SEC Form 4 indicating that he sold 115,000 shares for $4.1 million, ending with 0.66 million shares in direct and 0.08 million shares in indirect holdings after the sale. In comparison, insiders sold 0.34 million shares in the past year. HFC shares currently at 9-10 forward P/E and 1.4 P/B compared with averages of 18.9 and 4.7 for its peers in the oil refining & marketing group, while earnings are projected to fall from $6.42 in 2011 to $3.78 in 2013. Inc. (NASDAQ:SOHU): SOHU is the third largest internet portal and a leading brand in China. It offers Chinese language web navigational and search capabilities, 12 main content channels, Web-based communications and community services, and a platform for e-commerce services. Earlier today, COO Xin Wang filed SEC Form 4 indicating that he purchased 60,000 shares for $3.0 million, increasing his holdings to 90,000 shares after the purchase. Insider purchases are rare at SOHU, and in fact this is the only purchase at least in the last two years. SOHU shares trade at a current 10.3 P/E and 1.9 P/B compared with averages of 19.9 and 2.3 for its peers in the internet services group.

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

  • a $4.6 million sale by Chairman Lynn Elsenhans at oil refining and marketing company Sunoco Inc. (NYSE:SUN);
  • a $3.7 million sale by Director Paul Biddelman at Higher One Holdings Inc. (NYSE:ONE), a provider of a comprehensive suite of disbursement and payment solutions for higher education solutions and their students;
  • a $1.9 million sale by President and CSO Bryant Smith at Sonic Automotive (NYSE:SAH), one of the largest automotive retailers in the U.S.;
  • a $1.7 million sale by EVP Anthony Welters at UnitedHealth Group Inc. (NYSE:UNH), a diversified health and well-being company, serving more than 70 million Americans; and
  • a $1.2 million sale by two insiders at Kroger Co. (NYSE:KR), one of the largest grocery retail chain operators in the U.S., and also a manufacturer and processor of food for sale in its supermarkets;

Furthermore, insiders also reported noteworthy buys on Friday and Monday in:

  • Arch Coal Inc. (ACI), engaged in the production of steam and metallurgical coal from surface and underground mines, in which Director George Morris purchased 8,400 shares for $99,876, compared to a total of 48,740 shares purchased by insiders at ACI in the last year;
  • Syntroleum Corp. (NASDAQ:SYNM), engaged in commercializing and licensing its gas-to-liquids or GTL technologies for converting natural gas to synthetic liquid hydrocarbons, in which Director Frank Bumstead purchased 82,182 shares for $81,442, compared to 0.25 million shares purchased by SYNM insiders in the past year;
  • Skullcandy Inc. (NASDAQ:SKUL), a manufacturer and distributor of headphones and other audio accessories to retailers in the U.S. and to distributors in countries worldwide, in which Director Rick Alden purchased 17,400 shares for $0.25 million, compared to only an additional 17,750 shares purchased in the past year; and
  • Spectranetics Corp. (NASDAQ:SPNC), a developer of single-use medical devices used with a proprietary laser system in minimally invasive cardiovascular surgeries, in which VP Lisa Renee Boehme purchased 10,000 shares for $86,600, compared to 28,000 shares purchased in the past year.

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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