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Welcome to edition 101 of Insider Weekends. Insider buying increased with insiders purchasing $83.2 million of their stock last week compared to $59 million in the week prior. Selling decreased with insiders selling $844.3 million worth of stock last week compared to $1.58 billion in the week prior.

Sell/Buy Ratio: The insider Sell/Buy ratio is calculated by dividing the total insider sales in a given week by total insider purchases that week. The adjusted ratio for last dropped down to 10.2. In other words, insiders sold more than 10 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the week prior when the ratio stood at 26.7. We are calculating an adjusted ratio by removing transactions by funds and companies and trying as best as possible only to retain information about insiders and 10% owners who are not funds or companies.

(click to enlarge)Insider Sell Buy Ratio May 11, 2012

Insider Sell Buy Ratio May 11, 2012

Note: As mentioned in the first post in this series, certain industries have their preferred metrics such as same store sales for retailers, funds from operations (FFO) for REITs and revenue per available room (RevPAR) for hotels that provide a better basis for comparison than simple valuation metrics. However metrics like Price/Earnings, Price/Sales and Enterprise Value/EBITDA included below should provide a good starting point for analyzing the majority of stocks.

Notable Insider Buys:

  1. Netflix, Inc. (NASDAQ:NFLX): $77.38

Director Jay C. Hoag acquired 200,000 shares of Netflix, paying $72.55 per share for a total amount of $14.5 million. Mr. Hoag is the founding member of venture capital firm Technology Crossover Partners, which manages $3.3 billion in assets. He has served as a director of Netflix since 1999 and has been a technology investor for over 29 years.

We wrote the following about the company last month when another director paid $85.05 for 6,000 shares of Netflix:

after years of heavy insider selling, we are seeing our first insider purchase after Netflix saw its stock drop precipitously over the last year. The bears had it right that higher content costs and competition in the streaming space will eventually hit Netflix’s margins. While this purchase might give the bulls some ammunition in the short-term, I am not convinced Netflix has hit bottom yet.

The stock is down an additional 15% since then and is probably worth exploring further in light of Mr. Hoag’s purchase.

P/E: 26.19 Forward P/E: 35.5 Industry P/E: 32.61
P/S: 1.2 Price/Book: 6.06 EV/EBITDA: 11.09
Market Cap: $4.30B Avg. Daily Volume: 5,847,220 52 Week Range: $62.37 – $304.79
  1. Cabela’s Inc. (NYSE:CAB): $36.45

Director Reuben Mark acquired 40,000 shares of this outdoor sporting goods retailer, paying $36.17 per share for a total amount of $1.4 million. Mr. Mark increased his stake by 3.57% to 1,159,413 shares with this purchase.

Mr. Mark has served on Cabela’s board since 2004 and was the former CEO and Chairman of Colgate-Palmolive (NYSE:CL). He is the only insider who has been periodically buying Cabela’s stock over the last two years. At first blush, it appears that Cabela’s has a lot of debt on its balance sheet. But as of Q1 2012, the company has reclassified that debt to more accurately match it against the $2.9 billion in credit card loans it carries on the asset side of the balance sheet. Yahoo currently shows Cabela’s trading at 13 times EBITDA, but once you make the balance sheet adjustment, the company is trading for less than 9 times EBITDA.

P/E: 16.95 Forward P/E: 12.27 Industry P/E: 23.91
P/S: 0.89 Price/Book: 2.05 EV/EBITDA: 12.99
Market Cap: $2.56B Avg. Daily Volume: 872,994 52 Week Range: $19.12 – $41.61
  1. Vocus Inc. (NASDAQ:VOCS): $16.63

Shares of this marketing software company were acquired by four insiders:

  • Chairman, CEO and President Richard E. Rudman acquired 60,000 shares, paying $15.99 per share for a total amount of $959,400. Mr. Rudman increased his stake by 11.53% to 580,185 shares with this purchase.

  • EVP, CFO and Secretary Stephen A. Vintz acquired 15,000 shares, paying $15.99 per share for a total amount of $239,850. Mr. Vintz increased his stake by 15.19% to 113,772 shares with this purchase.

  • Director Kevin J. Burns acquired 10,000 shares, paying $16.07 per share for a total amount of $160,700. Mr. Burns increased his stake by 39.06% to 35,602 shares with this purchase.

  • EVP and COO William Raymond Wagner acquired 1,500 shares, paying $16.24 per share for a total amount of $24,360. Mr. Wagner increased his stake by 1.46% to 103,998 shares with this purchase.

P/E: N/A Forward P/E: 25.58 Industry P/E: 18.91
P/S: 2.51 Price/Book: 3.01 EV/EBITDA: 311.69
Market Cap: $316.67M Avg. Daily Volume: 512,651 52 Week Range: $11.95 – $33.7
  1. Quest Diagnostics Inc. (NYSE:DGX): $57.21

President and CEO Stephen H. Rusckowski acquired 20,000 shares of this diagnostic testing and services company, paying $56.89 per share for a total amount of $1.1 million. Mr. Rusckowski increased his stake by 46.47% to 63,034 shares with this purchase.

This is a sizable purchase and the only purchase we have seen at Quest since we started collecting insider data. Mr. Rusckowski was appointed to the role of CEO at Quest last month and that might partially explain the purchase. The stock appears to be reasonably valued at under 8 times EBITDA with operating margins of 18%. Quest has about $3.77 billion in net debt on its balance sheet.

P/E: 13.44 Forward P/E: 11.28 Industry P/E: 15.87
P/S: 1.2 Price/Book: 2.36 EV/EBITDA: 7.9
Market Cap: $9.08B Avg. Daily Volume: 916,627 52 Week Range: $45.13 – $62.32
  1. Opko Health, Inc. (NYSE:OPK): $4.55

CEO & Chairman Phillip Frost M.D. acquired 190,000 shares of this medical devices and drug development company, paying $4.49 per share for a total amount of $852,425. These shares were purchased indirectly by Frost Gamma Investments Trust.

P/E: N/A Forward P/E: N/A Industry P/E: 21.83
P/S: 47.14 Price/Book: 8.2 EV/EBITDA: -64.89
Market Cap: $1.34B Avg. Daily Volume: 1,796,790 52 Week Range: $3.15 – $5.85

Notable Insider Sales:

  1. Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR): $25.16

Shares of this specialty coffee company were sold by 2 insiders:

  • Founder and Director Robert P. Stiller sold 5,000,000 shares for $24.68, generating $123.4 million from the sale.
  • Director William D. Davis sold 548,000 shares for $25.28, generating $13.9 million from the sale.

These were controversial sales as both sales listed margin calls as the reason for these sales and the board of Green Mountain reacted by restricting the roles of both members without actually removing them from the board. As you can see from this page, Mr. Stiller has been selling even as the stock dropped from a peak of over $111 last fall to current levels.

P/E: 12.09 Forward P/E: 7.99 Industry P/E: 19.17
P/S: 1.17 Price/Book: 1.89 EV/EBITDA: 6.55
Market Cap: $3.91B Avg. Daily Volume: 7,816,540 52 Week Range: $24.03 – $115.98
  1. MAKO Surgical Corp. (NASDAQ:MAKO): $23.2

Director John Savarese sold 1,256,903 shares of this medical devices company for $25.23, generating $31.7 million from the sale. These shares were sold indirectly by Montreux Equity Partners.

P/E: N/A Forward P/E: N/A Industry P/E: 21.83
P/S: 11.11 Price/Book: 10.77 EV/EBITDA: -31.64
Market Cap: $967.30M Avg. Daily Volume: 1,258,810 52 Week Range: $21.4 – $45.15
  1. Rackspace Hosting, Inc. (NYSE:RAX): $52.36

Shares of this server and cloud hosting company were sold by two insiders:

  • Chairman of the Board Graham M. Weston sold 300,000 shares for $52.43, generating $15.7 million from the sale. These shares were sold indirectly by Wittington America, Ltd.

  • MD, International Taylor Rhodes sold 2,738 shares for $52.06, generating $142,537 from the sale. 2,148 of these shares were sold as a result of exercising options immediately prior to the sale.

P/E: 84.59 Forward P/E: 45.53 Industry P/E: 11.12
P/S: 6.36 Price/Book: 10.44 EV/EBITDA: 21.89
Market Cap: $6.97B Avg. Daily Volume: 2,171,110 52 Week Range: $30.34 – $60
  1. PVH Corp. (NYSE:PVH): $81.23

CEO of Tommy Hilfiger Fred Gehring sold 175,292 shares of this apparel company for $83.59, generating $14.7 million from the sale. These shares were sold indirectly By Elmira 5 B.V.

P/E: 18.64 Forward P/E: 11.46 Industry P/E: 14.08
P/S: 0.94 Price/Book: 2.16 EV/EBITDA: 9.4
Market Cap: $5.59B Avg. Daily Volume: 886,190 52 Week Range: $51.15 – $93.06
  1. Cerner Corporation (NASDAQ:CERN): $79.92

Shares of this healthcare information services provider were sold by 3 insiders:

  • Vice Chairman Clifford W. Illig sold 120,000 shares for $81.56, generating $9.8 million from the sale.

  • Director William B. Neaves sold 22,400 shares for $80.38, generating $1.8 million from the sale. These shares were sold indirectly through a trust.

  • Chairman, CEO & President Neal L. Patterson sold 20,000 shares for $80.59, generating $1.6 million from the sale.

P/E: 42.06 Forward P/E: 28.85 Industry P/E: 24.38
P/S: 5.85 Price/Book: 5.52 EV/EBITDA: 20.25
Market Cap: $13.62B Avg. Daily Volume: 1,157,150 52 Week Range: $53.93 – $84.10

Disclosure: See author's portfolio holdings here.

Source: Insider Buys And Sells: Netflix, Mako Surgical