We present here two noteworthy insider buys and twelve noteworthy insider sells in the consumer and retail sectors 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 (a prior article on insider trades during the same period in the basic materials & energy sector can be accessed by clicking on the above hyperlink, and successive articles on other insider trades in other sectors can be accessed 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):
Sirius XM Radio (SIRI): SIRI provides satellite radio services in the U.S. and Canada via approximately 135 channels of commercial-free music, sports, news, talk, traffic and weather on a subscription basis, to more than 22 million subscribers. On Thursday, two insiders filed SEC Forms 4 indicating that they sold 2.25 million shares for $5.1 million. The sellers included President & Chief Content Officer Scott Greenstein selling 1.39 million shares, ending with 84,677 shares in indirect holdings, and EVP & Chief Administration Officer Dara Altman selling 0.87 million shares, ending with 55,179 shares in direct and indirect holdings. Insider selling has picked up recently at SIRI, with insiders selling 29.36 million shares in the past three months, in comparison to a total 43.24 million shares sold in the past two years.
SIRI reported its Q1 (March) last Tuesday, and in a nutshell, the company outperformed on all levels, beating analyst revenue and earnings estimates (2c v/s 1c), a drop in churn rate to 1.9%, subscriber base at all-time highs, and becoming cash flow positive for the first time ever. The stock price, however, has dropped about 5% since the report, closing Friday near three-month lows, with half of that drop on Friday. Although some of the blame could easily be laid on the weak market on Friday, clearly the majority of investors did not share the sentiment of bulls.
We have written about SIRI several times before, and continue to believe that while the stock trading in a tight range near multi-year highs is technically a positive, it will be difficult for the stock to break-out much beyond the long-term highs in the $2.40s until earnings generally break-out of the 1c-2c range.
Clearly, last week's report is a major positive for the stock price, and so is Liberty Media's (LMCA) attempt to take control of the company, but the fact that even with these positive developments, SIRI continues to stay in a trading range supports our original thesis on the need for earnings to break above 2c for the stock to make a substantial move. It seems, at least for now, SIRI longs may have to wait another quarter, or possibly more until after the summer, for the stock to break-out into new multi-year high territory.
Harley-Davidson Inc. (HOG): Harley-Davidson, an American cultural icon, manufactures the famed Harley-Davidson brand of motorcycles as well as a complete line of motorcycle parts, accessories and general merchandise, and also financing services to dealers and customers in the U.S. and Canada. On Thursday, four insiders filed SEC Forms 4 indicating that they exercised options to acquire 13,867 shares, and sold those and an additional 1,750 shares for $0.8 million. Of these, the large majority (10,435 shares) were sold by VP Paul Jones. In comparison, insiders sold just over 53,000 shares in the past year.
HOG reported its Q1 the week before last, on Wednesday, beating analyst revenue and earnings estimates (74c v/s 72c), and guiding higher its full-year shipment to 245,000-250,000 motorcycles from prior the prior range of 240,000-245,000. Its shares moved higher by almost 8% at the peak last week, before closing the week lower due to the weak market, but still up about 3% since before the report. Its shares trade at 20.2 current P/E on a TTM (trailing-twelve-month) basis and 4.7 P/B compared to averages of 11.0 and 5.2 for the domestic auto group.
While Q1 was clearly an outperformance, and the stock could go slightly higher from here based on technical momentum, we believe that the easy money has already been made and stock appears close to full valuation here, even based on its own historical premium P/E range, and also v/s average P/E for its peers in the domestic auto group.
Kimberly-Clark Corp. (KMB): KMB manufactures disposable diapers, baby wipes, facial and bathroom tissue, paper towels and various commercial hygiene products. On Thursday, six insiders filed SEC Forms 4 indicating that they exercised options to acquire 612,090 shares, and sold those and an additional 2,000 shares for $48.2 million, with 2,886 of those shares sold pursuant to a 10b5-1 plan. The vast majority of the shares (0.43 million) were sold by Chairman of the Board and CEO Thomas Falk. In comparison, insiders sold 1.67 million shares in the past year.
KMB shares are up about 4% since the company reported a good Q1 (March) report two weeks ago, beating analyst revenue ($5.24 billion v/s $5.05 billion) and earnings estimates ($1.24 v/s $1.17), and guiding FY 2012 EPS in-line. The shares currently trading near all-time highs and at a premium 14-15 forward P/E and 5.5 P/B compared to averages of 11.1 and 3.2 for its peers in the consumer staples group. However, the company is a strong dividend playing, yielding 3.8% v/s the average of 1.9% for its peers in the group, and with a record 39 years of growing dividends every year.
On top of these, additional large insider sales last week on Wednesday through Friday in the consumer and retail sectors included:
- a $24.9 million sale by two insiders at Toll Brothers Inc. (TOL), that builds single-family detached and attached homes, and arranges financing, in middle and high-income residential communities in the U.S.;
- an $18.7 million sale by two insiders at Under Armour Inc. (UA), a leading designer, marketer and distributor of branded performance apparel, footwear and accessories worldwide, that are engineered to be worn in nearly every climate;
- a $14.2 million sale by two insiders at Herbalife Ltd. (HLF), a network marketer offering weight management, nutritional supplements, and skin and hair care products to its members;
- a $3.4 million sale by two insiders at Body Central Corp. (BODY), a women's apparel and accessories retailer that operates over 200 Body Central and Body Shop banners in 23 states in the South, Midwest and Mid-Atlantic states;
- a $3.1 million sale by Director Bruce Duncan at Starwood Hotels & Resorts Worldwide (HOT), that operates primarily luxury and upscale full service hotels and resorts under the brand names of St. Regis, The Luxury Collection, W, Westin, Le Meridien, Sheraton, Four Points, Allott and Element;
- a $2.9 million sale by three insiders at DR Horton Inc. (DHI), that builds single-family detached, as well as attached homes, such as town homes, duplexes, triplexes and condominiums, for first-time and move-up home buyers in 26 states and 72 metropolitan markets;
- a $2.8 million sale by CEO Stuart Miller at Lennar Corp. (LEN), that builds single-family attached and detached homes in 14 states, develops and sells residential land, and provides related financial services;
- a $2.3 million sale by two insiders at Amazon.com Inc. (AMZN), that provides online retail services in North America and internationally; and
- a $0.8 million sale at Leapfrog Enterprises Inc. (LF), that is a leading provider of technology-based educational products and related proprietary content for preschool through 8th grade children worldwide, worthy of mention mainly because of the high profile of the seller, Oracle Corp. (ORCL) co-founder and CEO Larry Ellison, who still holds 1.20 million shares after the sale.
Furthermore, insiders also reported noteworthy buys on Wednesday through Friday of last week in the consumer and retail sectors in:
- Oshkosh Corp. (OSK), that manufactures specialty, commercial, fire, emergency and military trucks, truck bodies and crane components, in which CEO Charles Szews purchased 15,000 shares for $0.35 million, increasing his holding to 0.15 million shares, and the only insider purchase at OSK at least in the last two years; and
- iParty Corp. (IPT), that operates over 50 retail party goods stores in New England and Florida, in which four insiders purchased 126,904 shares for $23,998, in comparison to 0.14 million shares purchased by IPT insiders 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.
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