Analyzing Thursday's Noteworthy Insider Trades

by: GuruFundPicks

We present here noteworthy insider trades (ex-healthcare sector, that was analyzed in a separate article) from Thursday's (March 29th, 2012) over 315 separate SEC Form 4 (insider trading) filings, as part of our daily and weekly coverage of insider trades. 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):

Limited Brands Inc. (LTD): LTD, probably best known by its brands Victoria's Secret and Bath & Body Works, it operates as a specialty retailer of women's intimate and other apparel, beauty, and personal care products and accessories, operating over 2,600 specialty stores in the U.S., and also selling its merchandise via more than 680 company-owned and franchised locations worldwide. On Thursday, Chairman & CEO, and also the founder of LTD, Leslie Wexner filed SEC Form 4 indicating that he exercised options to acquire 516,630 shares and sold 4.0 million shares for $195.0 million, ending with over 31 million shares (not including derivative securities). In comparison, insiders sold only an additional 0.9 million shares in the past year.

LTD shares have been among the strongest performers in the retail sector since the lows of the 2008-09 meltdown, rising to eight-fold since that time. Its shares, currently near all-time highs, trade at 15.1 forward P/E, at par with the average of 15.1 for its peers in the apparel & shoe retail group, while earnings are projected to rise from $2.60 in 2012 to $3.19 in 2014 at an respectable annual growth rate of 10.8%.

Pioneer Natural Resources (PXD): PXD is engaged in the exploration and production oil and gas in the U.S. and South Africa. On Thursday, COO Timothy Dove filed SEC Form 4 indicating that he sold 13,000 shares for $1.4 million, ending with 0.32 million shares (not including derivative holdings). Insider selling has picked up recently at PXD, with 0.11 million shares in March; in comparison, insiders sold 0.19 million shares in the past year. PXD shares have been among the strongest performers in the oil & gas exploration & production group, rising to ten-fold since the depths of the 2008-09 meltdown; its shares currently trade at 14-15 forward P/E and 2.3 P/B compared to averages of 15.6 and 5.2 for its peers in the oil & gas exploration & production group.

Big Lots Inc. (BIG): BIG operates as a broad line closeout retailer, with almost 1,400 stores in the U.S., Puerto Rico and Guam, offering a range of merchandise, including consumables, home improvement, furniture, electronics and seasonal categories. On Thursday, seven insiders filed SEC Forms 4 indicating that they sold 99,736 shares for $4.6 million, pursuant to 10b5-1 plans, with the large majority sold by EVP Joe Cooper (25,000 shares) and EVP Lisa Bachmann (25,000 shares). This is in addition to the sale of 35,750 shares that we reported at the beginning of March, and also other insider sales this month, so that in total insiders reported selling 0.76 million shares in March. In comparison, insiders sold 0.95 million shares in the past year.

BIG shares currently trade at 10-11 forward P/E and 3.3 P/B compared to averages of 15.3 and 3.7 for its peers in the discount retail group. In the latest Q4 reported at the beginning of March, BIG beat analyst earnings ($1.75 v/s $1.73) and revenue estimates ($1.67 billion v/s $1.66 billion), and guided FY earnings in-line. Its shares rose slightly earlier this month on the back of the positive Q4 report, but retreated on Thursday after Deutsche Bank expressed concerns about near-term sales trends.

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

  • a $6.1 million sale by Director Lee Scott at Wal-Mart Stores (WMT), one of the world's largest retailers, and operator of Wal-Mart and Sam's Club stores worldwide under discount, super-center and neighborhood market formats, on top of the $8.7 million sale we reported earlier this week;
  • a $3.0 million sale by Founder John Hendricks at Discovery Communications (DISCA), that offers original and purchased programming to the media and entertainment industries in the U.S. and 180 other countries;
  • a $2.4 million sale by Chairman & CEO Michael Kowalski at Tiffany & Co. (TIF), engaged in the design, manufacture and retail of fine jewelry worldwide; and
  • a $2.1 million sale by EVP Dennis Parodi at American Eagle Outfitters (AEO), an apparel and accessories retailer that operates over a thousand American Eagle Outfitters, Aerie standalone, and 77Kids stores in the U.S. and Canada.

Furthermore, insiders also reported noteworthy buys on Thursday in:

  • Paramount Gold and Silver (PZG), a Canadian company engaged in the exploration and development of gold, silver and precious metals properties in Mexico and Nevada, in which two insiders reported purchasing 70,000 shares for $153,149, the only insider purchases this year;
  • Hatteras Financial Corp. (HTS), operating as an externally-managed mortgage REIT, that was formed in 2007 to invest in adjustable-rate and hybrid adjustable-rate single-family residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or U.S. Government-sponsored entities, in which Director Ira Kawaller purchased 1,800 shares for $48,816, in comparison to 2,220 shares purchased by insiders in the past year; and
  • KB Home (KBH), a builder of single-family attached and detached homes, townhomes and condominiums in nine states across the U.S., in which SVP Thomas Norton purchased 5,000 shares for $44,950, the first insider purchase since August of 2011.

General Discussion on Insider Trading

The reports in this series identify last week's insider trades of noteworthy significance by sector or industry group, either by virtue of their timing, their size, the number of insiders buying or selling, based on who is buying or selling, or by the trend of their buys and sales over the long-term. The rest of the series by sector and by week can be accessed from our author page.

Credit: Fundamental data in this article were based on SEC filings, Zacks Investment Research, Thomson Reuters and The information and data is believed to be accurate, but no guarantees or representations are made.

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.