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We present here seven noteworthy insider buys and eleven noteworthy insider sells from Wednesday through Friday's (May 2nd, 3rd, and 4th, 2012) over 1,100 separate SEC Form 4 (insider trading) filings, as part of our daily and weekly coverage of insider trades (ex-technology, healthcare, consumer & retail, and basic materials & energy sector that are analyzed in separate articles that can be accessed by clicking on the above hyperlink, and later from our author page).

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):

FirstEnergy Corp. (FE): FE is a diversified energy services holding company that provides electricity and natural gas services, as well as energy management and other energy-related services in OH, PA, NJ, WV, and MD. On Thursday, CEO Anthony Alexander filed SEC Form 4 indicating that he exercised options and sold the resulting 257,100 shares for $12.2 million, pursuant to a 10b5-1 plan, and ending with 0.61 million shares in direct and indirect holdings after the sale (not including derivative holdings). In comparison, insiders sold 0.33 million shares in the past year.

FE reported its Q4 on Tuesday, beating analyst earnings estimates (82c v/s 80c) and reaffirming FY guidance at $3.30-$3.60 v/s the $3.41 estimate. Its shares trade at a discount 14-15 forward P/E and 1.5 P/B compared with averages of 19.2 and 1.4 for its peers in the electric utilities group, while earnings are projected to fall from $3.64 in 2011 to $3.24 in 2013. Furthermore, FE has among the highest yields in the group at 4.7% versus the 3.8% average for the group.

The Sherwin-Williams Co. (SHW): SHW is a manufacturer, distributor and retailer of paints, coatings, and related products to professional, industrial, commercial and retail customers worldwide. On Thursday and Friday, four insiders filed SEC Forms 4 indicating that they exercised options to acquire 131,995 shares, and sold 126,089 shares for $15.3 million. In comparison, insiders sold 0.50 million shares in the past year.

SHW reported its Q1 (March) just over two weeks ago, beating analyst revenue and earnings estimates (95c v/s 94c), while guiding Q2 revenue and EPS in-line and raising FY 12 EPS ($5.75-$6.05 v/s $5.37-$5.67). The shares are up about 2.5% since the report, and up a strong 33% YTD. Its shares currently trade at 16-17 forward P/E and 8.2 P/B compared to averages of 13.9 and 4.0 for its peers in the paints & related products group, while earnings are projected to rise at a strong 22.5% annual rate from $4.90 in 2011 to $7.235 in 2013 compared to the 11% average EPS growth rate for its peers in the group.

Host Hotel and Resorts Inc. (HST): HOST is a REIT that owns 110 full-service upper-upscale and luxury hotels across 26 states, D.C., Canada, Mexico and Chile. On Wednesday and Thursday, three insiders filed SEC Forms 4 indicating that they exercised options and sold the resulting 0.17 million shares for $2.9 million. In comparison, insiders sold 0.49 million shares in the past year, with all of those sales being in the last nine weeks.

HST reported its Q1 (March) the week before last, on Wednesday, beating analyst earnings estimates (14c v/s 13c), and guiding in-line FY 2012 funds from operations (FFO). The stock currently trades at forward price to funds from operations (P/FFO) ratio of 13.8 compared to the average of 12.8 for its peers in the REIT Equity Trust group. Also, it has a dividend yield of 1.4% compared to the 4.1% average for the group.

P/FFO is a more appropriate measure of value, commonly used in the REIT group, as it adds back in depreciation expenses that are typically taken out in calculating net income and earnings. This is because real estate, unlike fixed PP&E costs in the case of other groups, rarely loses value over the long-term, and in fact, most often appreciates over the long-term. So, in this case spreading out the investment cost in PP&E (in this case, mostly real estate) charges over the long-term makes little sense as is done in calculating net income; hence, depreciation is added back in and the resulting FFO is a more appropriate measure of the cash flows than is earnings.

On top of these, additional large insider sales last week on Wednesday through Friday (ex-technology, healthcare, consumer & retail, and basic materials & energy sectors) included:

  • a $6.5 million sale by EVP Joanne Maguire at Lockheed Martin Corp. (LMT), a manufacturer of military aircraft, missiles, satellites, submarine combat systems and missile defense systems;
  • a $4.9 million sale by Chairman Stephen Green at SL Green Realty Corp. (SLG), a self-administered and self-managed REIT that owns, manages, leases, acquires and develops Class B office properties in Manhattan;
  • a $4.1 million sale by two insiders at Travelers Companies Inc. (TRV), that provides commercial and personal property and casualty insurance products and services to businesses, governments, associations and individuals primarily in the U.S.;
  • a $2.7 million sale by two insiders at United Continental Holdings (UAL) provides air transportation for passengers, freight and mail with over 5,675 flights daily to over 372 airports on six continents;
  • a $2.2 million sale by three insiders at US Bancorp (USB), that is a super-regional financial services holding company, operating full-service branch offices and ATMs, and providing a full range of banking and financial services including brokerage, insurance, investment, mortgage, trust and payment services to individuals, institutions and corporations;
  • a $2.0 million sale by Director Leslie Brun at BPO services company Automatic Data Processing (ADP);
  • a $1.5 million sale by two insiders at metals processing & fabrication company Timken Co. (TKR); and
  • a $1.0 million sale by Director Dwight Taylor at T. Rowe Price Group Inc. (TROW), a publicly-owned investment adviser to individual and institutional investors.

Furthermore, insiders also reported noteworthy buys on Wednesday through Friday (ex-technology, healthcare, consumer & retail, and basic materials & energy sectors) in:

  • non-hazardous solid waste collection services company Republic Services Inc. (RSG), in which 10% owner Bill Gates via Cascade Investments LLC purchased 3.7 million shares for $101.5 million;
  • NYSE Euronext (NYX), that operates the NYSE, Euronext, NYSE Amex, and NYSE Arca exchange markets that provide trade execution of equity securities, in which Director Duncan McFarland purchased 10,000 shares for $0.25 million, increasing his holdings to 32,000 shares, and in comparison to 46,000 shares purchased by NYX insiders in the past two years;
  • RTI International Metals Inc. (RTI), a manufacturer of titanium mill products, fabricated products, and titanium alloys for the aerospace and defense markets worldwide, in which Director Ronald Gallatin purchased 6,959 shares for $0.18 million, increasing his holdings to 60,000 shares, and in comparison to 9,959 shares purchased by RTI insiders in the last two years;
  • Caterpillar Inc. (CAT), the world's largest manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines, in which Director Eugene Fife purchased 1,000 shares for $0.10 million, increasing his holdings to 31,503 shares in direct and indirect holdings, and in comparison to 2,050 shares purchased by insiders at CAT in the past year;
  • Radian Group Inc. (RDN), that offers private mortgage insurance for homeowners that put down less than 20% down payment when purchasing their homes, in which two insiders purchased 35,000 shares for $80,144, in comparison to 0.40 million shares purchased by insider at RDN in the past two years;
  • VSE Corp. (VSEC), a diversified federal services company providing engineering, logistics, IT, construction management, and consulting services to U.S. Department of Defense, and professional services to federal civilian agencies in the U.S., in which two insiders purchased 7,572 shares for $0.18 million, in comparison to 76,122 shares purchased by VSEC insiders in the past two years; and
  • Bank of America (BAC), that is a global financial services company providing banking and financial services to individuals, small- and middle-market businesses, corporations and governments primarily in the U.S., and also internationally in over 40 foreign countries, in which Director Donald Powell purchased 5,000 shares for $40,250, increasing his holdings to about 95,000 shares, and in comparison to 42,000 shares purchased by insiders at BAC in the past year.

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

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.

Source: Analyzing 7 Noteworthy Buys And 11 Sells On Wednesday To Friday Of Last Week