Last week (May 14th-18th, 2012), insiders made noteworthy buys in three plunging consumer and retail sector stocks, and noteworthy buys and sells in several other consumer and retail sector companies.
Insider buys, especially unusually large ones in such stocks that are beaten down and trading near their lows, may give bulls comfort that the long-term fundamentals may be intact and that a turn may be underway in the next couple of quarters. On the other hand, sales at depressed prices after the plunge may lend even further credence to the bear thesis. Similarly, noteworthy buys in surging stocks may give investors some confidence that knowledgeable insiders are finding value at such elevated prices after a strong surge.
The transactions in this article were selected based on a review of over 2,200 separate SEC Form 4 (insider trading) filings last week. 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.
Fossil Inc. (FOSL): FOSL designs, develops, markets and distributes fashion accessories worldwide, including fashion watches, handbags, belts, small leather goods, jewelry, and sunglasses. Last week, two insiders filed SEC Forms 4 indicating that they purchased 2,700 shares for $0.20 million. This is in addition to the 7,100 shares that insiders reported buying just the prior week. In comparison, insiders purchased 13,170 shares in the past two years.
FOSL shares collapsed as investors rushed out en masse the week before last after the company reported its Q1 (March), in which it beat earnings estimates by a penny (93c vs. 92c) and missed revenue estimates ($590 million v/s $618 million). However, it was the forward projections that spooked investors, with the company guiding Q2 earnings to 77c-79c vs. the 94c estimate, while also guiding lower Q2 revenues and FY 2012 annual earnings, citing weakness in its European market as the primary reason for the projected shortfall.
Overall, the shares are off almost 50% for the highs two-and-a-half weeks ago, and they currently trade at 11-12 forward P/E and 3.9 P/B compared to averages of 14.2 and 1.6 for its peers in the precious metals and jewelry group, while earnings are projected to rise at a 16.1% annual rate from $4.61 in 2011 to $6.21 in 2013. Also, a number of brokers have come out in support of the stock after the plunge based on value, most notably Benchmark & Co. that upgraded it to Buy with a $100 price target, well above current prices in the $70 range.
Besides FOSL, insiders also reported noteworthy buys last week in two more consumer and retail sector growth stocks that have plummeted recently to their lows:
Netflix Inc. (NFLX), that is a provider of subscription-based Internet services for watching online movies and TV shows in the U.S. and internationally via Netflix.com, and a service to deliver DVDs and Blu-ray discs to their homes for subscribers in the U.S., in which Director Jay Hoag purchased 143,400 shares for $10.4 million, on behalf of venture capital firm Technology Crossover Ventures, a firm he co-founded in 1995; and
Herbalife Ltd. (HLF), that is a global network marketer offering weight management, nutritional supplements, and skin and hair care products to its members, in which Director John Tartol purchased 1,000 shares for $45,289, in comparison to 19,900 shares purchased by insiders in the past two years, and in addition to the purchase of 14,000 shares just last week that we reported on earlier.
On top of these, insiders also reported noteworthy sales last week in the consumer and retail sector stocks in:
Sirius XM Radio (SIRI), that 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, in which CEO Mel Karmazin sold 13.7 million shares for $27.2 million, in comparison to 43.1 million shares sold by insiders in the past year;
Priceline.com Inc. (PCLN), the pioneer of name-your-own price service, that is a diversified online travel services company. It provides airline ticket, hotel room, car rental, vacation package, and cruise services through Priceline.com, in which three insiders filed SEC Forms 4 indicating that they sold 10,000 shares for $6.7 million, in comparison to 93,086 shares sold by insiders in the past year;
Amazon.com Inc. (AMZN), a leading online retailer in North America and internationally, in which seven insiders filed SEC Forms 4 indicating that they sold 25,361 shares for $5.8 million, in comparison to 0.31 million shares sold by insiders in the past year;
The TJX Companies Inc. (TJX), that is a leading off-price apparel and home fashions retailer in the U.S. and internationally, operating its stores under the T.J. Maxx, Marshalls, Winners, HomeSense, HomeGoods and T.K. Maxx trademarks, in which four insiders filed SEC Forms 4 indicating that they sold 103,476 shares for $4.4 million, in comparison to 0.80 million shares sold by insiders in the past year;
Tyson Foods Inc. (TSN), that is one of the world's largest fully-integrated producers and marketers of beef, chicken, pork, and related allied products for grocery retailers, wholesalers, and meat distributors, in which four insiders filed SEC Forms 4 indicating that they sold 167,732 shares for $3.3 million, in comparison to 0.20 million shares sold by insiders in the past year;
The Hershey Company (HSY), one of the world's most well-recognized chocolate brands, and a leading snack food company that manufactures chocolate and confectionery products, pantry items, and gum and mint refreshment products worldwide, in which SVP Terence O'day sold 45,000 shares for $3.1 million, in comparison to 1.1 million shares sold in the past year;
Kohl's Corp. (KSS), that operates over 1,000 family-oriented, specialty department stores in the U.S., in which Chief Administrative Officer John Worthington sold 43,888 shares for $2.1 million, in comparison to 0.15 million shares sold by insiders in the past year;
CVS Caremark Corp. (CVS), that is a leading integrated pharmacy services provider in the U.S., including the nation's largest pharmacy chain, and a provider of pharmacy benefit management services, in which EVP & CLO Douglas Sgarro sold 35,043 shares for $1.6 million, in comparison to 0.48 million shares sold in the past year;
Polaris Industries Inc. (PII), that manufactures all-terrain recreational and utility vehicles, snowmobiles, and replacement parts and related accessories, in which VP Matthew Homan sold 13,500 shares for $1.1 million, in comparison to 0.15 million shares sold in the past year; and
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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(A prior article on last week's noteworthy buys in biotech and other healthcare stocks can be accessed by clicking on the above hyperlink, and others on insiders trades in basic materials and energy, tech and other sectors can be accessed from our author page.)
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.