Analyzing Friday's Noteworthy Insider Trades

by: GuruFundPicks

We present here noteworthy insider trades from Friday's (March 30th, 2012) over 215 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):

Celgene Corp. (CELG): CELG develops therapies to treat cancer and immune-inflammatory related diseases by regulating cells, genes and proteins. On Friday, Director Gilla Kaplan filed SEC Form 4 exercised options and sold the resulting 8,000 shares for $0.63 million, ending with 5,370 shares after the sale. Insider selling is uncommon at CELG, and in fact the last sale prior to this one was a 5,000 shares sale in September of last year, and overall insiders sold 33,000 shares in the last year.

CELG reported missing analyst earnings estimates and guiding FY2012 revenue and earnings in-line, in its latest Q4 issued at the end of January. Its shares are near all-time highs, up over 35% in the past year, and trading at 13-14 forward P/E and 6.1 P/B compared to averages of 43.2 and 10.9 for its peers in the biotech group, while earnings growth is projected to be stellar for a company this size, from $3.79 in 2011 to $5.67 in 2013 at an annual 22.3% growth rate.

Coca Cola Co. (KO): KO manufactures non-alcoholic beverage concentrates and syrups sold to bottlers and fountain wholesalers. On Friday, two insiders filed SEC Forms 4 indicating that they exercised options and sold the resulting 100,000 shares for $7.2 million, pursuant to 10b5-1 plans, with EVP Alexander Cummings selling 85,000 of those shares and the remaining 15,000 shares being sold by SVP Harry Anderson.

KO shares recently hit 13-year highs, up almost 10% in the last year, and trading at a premium 15.6 forward P/E compared to the 15.1 average for the soft beverage group, but more importantly perhaps they also trade at a premium to arch-rival PepsiCo Inc. (PEP), whose shares trade at a more discounted 14.9 forward P/E, while earnings growth at KO is projected at an 7.9% annual rate over the next two years from $3.74 in 2011 to $4.47 in 2013, versus the 0.5% earnings growth rate projected at arch-rival PEP. Furthermore, KO has an attractive 2.8% annual dividend yield compared to the 1.1% average for its group and the 3.1% at arch-rival PEP.

Amarin Corp. (AMRN): AMRN is a clinical stage Ireland-based global pharmaceutical group, which develops novel drugs for the treatment of cardiovascular diseases using its proprietary advanced oral and trans-dermal drug delivery technologies. On Friday, Director James Healy, also a General Partner at Menlo-Park, CA-based venture capital firm Sofinnova Venture Partners, filed SEC Form 4 indicating that he sold 1.0 million shares for $11.0 million, indirectly held by him via Sofinnova Venture Partners VII, L.P., ending with 7.51 million shares after the sale. The last time Sofinnova sold its holdings in AMRN was in March of last year, selling a cumulative 3.64 million shares that month.

AMRN shares are consolidating at their highs after spiking higher in the middle of March, prior to and just after the company announced last Tuesday that the USPTO (U.S. Patent and Trademark Office) published notification of a Notice of Allowance for its '598 patent for AMR-101, a prescription grade omega-3 fatty acid for the treatment of patients with very high triglyceride levels that are at increased risk for developing coronary artery disease. The issuance of the Notice of Allowance is a significant step toward the commercialization of AMR-101, and the street is rife with speculation of partnering possibilities, or even an outright acquisition at a stiff premium to current prices in the $11-$12 range. Furthermore, MKM partners last month reiterated its buy and $20 price target on AMRN.

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

  • an $8.6 million sale by Chairman of the Board & CEO Michael McCallister at Humana Inc. (HUM), a provider of managed healthcare services through HMO, PPO and government contracts to about 11.2 million members in the U.S.;
  • a $6.8 million sale by Chairman & CEO Arthur Coppola at Macerich Co. (MAC), a REIT that is engaged in the acquisition, ownership, development, redevelopment, management and leasing of regional and community shopping centers;
  • a $1.2 million sale by two insiders at film and TV entertainment producers and distributor Lions Gate Entertainment (LGF);
  • a $1.1 million sale by CFO Kevin Habicht at National Retail Properties (NNN), a REIT that invests in high-quality, single-tenant net lease retail properties nationwide; and
  • a $1.0 million sale by five insiders at Signet Jewelers Ltd. (SIG), a U.K.-based operator of retail jewelry stores, including 1,317 stores in the U.S. operating under the Kay Jewelers and Jared name, and another 540 stores in the U.K.

Furthermore, insiders also reported noteworthy buys on Friday in:

  • Rexnord Corp. (NYSE:RXN), a worldwide industrial company providing process & motion control and water management products that came public on just Thursday of last week, in which three insiders purchased a total of 60,000 shares for $1.08 million at the offering price of $18 per shares, with 42,000 of those shares purchased by CEO Todd Adams;
  • Alleghany Corp. (Y), that is engaged in the sale and underwriting of title insurance and in other real estate-related service businesses, in which EVP Joseph Brandon purchased 763 shares for $0.25 million, in addition to another 700 shares purchased earlier this month by Mr. Brandon, and in comparison to a total of 3,043 shares purchased by insiders in the last year; and
  • 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 CEO Christopher Crupi reported purchasing 50,000 shares for C$0.11 million, on top of the purchase of 70,000 shares by two insiders that we reported earlier this week, the only insider purchases in the last year.

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.

About this article:

Author payment: $35 + $0.01/page view. Authors of PRO articles receive a minimum guaranteed payment of $150-500. Become a contributor »
Problem with this article? Please tell us. Disagree with this article? .