Insiders made noteworthy buys (see definition below) in three high-growth healthcare stocks this past week (May 21 to 25), and sold two others. Insider buys, especially unusually large ones, in stocks trading near their highs 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 1,600 separate SEC Form 4 (insider trading) filings last week, 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:
Valeant Pharmaceuticals (VRX): VRX develops primarily branded drugs to treat central nervous system disorders, pain and cardiovascular disease. Last week, three corporate insiders, all Directors, filed SEC Forms 4 indicating that they purchased 11,225 shares for $0.54 million. This is in addition to the purchase of an additional 10,000 shares by two insiders last week. In comparison, corporate insiders purchased 0.28 million shares in the past year.
VRX reported its Q1 earlier this month, on May 3rd, beating analyst revenue estimates ($856 million vs. $795 million), and guiding FY 2012 earnings higher ($4.45-$4.70 vs. $3.95-$4.20). Its shares reacted strongly, gapping up in the following session, but have since retreated, trading down almost 20% from the intraday highs following the report. The company seems to be outperforming on many levels, and with shares trading at 10-11 forward P/E and 3.6 P/B, they are a discount to the averages of 12.1 and 4.3 for its peers in the pharmaceuticals group. It seems then that the decline in shares off of the highs is mostly from the market mayhem in May, and the insider buying this week is noteworthy in that respect.
In addition to VRX, insiders also reported noteworthy buys this past week in the following two high growth biotech stocks:
- Celgene Corp. (CELG), that develops therapies to treat cancer and immune-inflammatory related diseases by regulating cells, genes and proteins, in which CFO Jacqualyn Fouse purchased 1,000 shares for $68,920 shares, in comparison to insiders purchasing only an additional 500 shares in the past six months; and
- Questcor Pharmaceuticals (QCOR), that is an integrated specialty pharmaceutical company focused on the development, acquisition and marketing of innovative, acute care and critical care hospital and specialty pharmaceutical products, with its primary product being H.P. Acthar Gel, in which CFO Michael Mulroy purchased 1,000 shares for $40,000, in comparison to insiders purchasing only an additional 50 shares in the past year.
In addition to these, insiders also reported noteworthy sales last week in the healthcare sector in:
- McKesson Corp. (MCK), that is a provider of ethical drugs, health and beauty care products and medical supplies and equipment to pharmacies and hospitals, in which six insiders filed SEC Forms 4 indicating that they sold 0.33 million shares for $29.2 million, in comparison to 0.91 million shares sold by insiders in the past year; and
- ResMed Inc. (RMD), that is a provider of medical equipment for treating and diagnosing sleep disordered breathing, in which Director Christopher Roberts filed SEC Form 4 indicating that he exercised options and sold the resulting 30,000 shares for $0.97 million, in comparison to 0.66 million shares sold by 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.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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