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A study (pdf) titled "Predictive and Statistical Properties of Insider Trading" by James H. Lorie and Victor Niederhoffer reached the following conclusion:

This study indicates that proper and prompt analysis of data on insider trading can be profitable, although almost all previously published studies have reached the contrary conclusion. When insiders accumulate a stock intensively, the stock can be expected to outperform the market during the next six months. Insiders tend to buy more often than usual before large price increases and to sell more than usual before price decreases.

Based on the findings of this encouraging insider trading study, I screened for companies where at least one insider made a sell transaction filed on September 17. I chose the top seven companies with insider selling in dollar terms. Here is a look at the seven stocks:

1. Scripps Networks Interactive (SNI) is one of the leading developers of lifestyle-oriented content for television and the Internet, where on-air programming is complemented with online video, social media areas and e-commerce components on companion websites and broadband vertical channels. The company's media portfolio includes popular lifestyle television and Internet brands HGTV, Food Network, Travel Channel, DIY Network, Cooking Channel and country music network Great American Country.


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Insider sells

  • Kenneth Lowe sold 162,350 shares on September 13-14. Kenneth Lowe is chairman of the board, president and CEO of Scripps Networks Interactive.
  • Mark Hale sold 14,709 shares on September 14. Mark Hale is executive vice president, operations and chief technology officer for Scripps Networks Interactive.

Financials

The company reported the second-quarter financial results on August 2 with the following highlights:

Revenue $601 million
Net income $142.4 million
Cash $261.8 million

Outlook

Total revenue in 2012 is expected to increase between 10 and 12 percent. Contributing to the increase is better than expected advertising revenue during the first half of the year that resulted from strong viewership performance at the company's lifestyle networks. The inclusion of Travel Channel International results in the second half of the year also is contributing to the increase in expected revenue.

Non-programming expenses are expected to increase between 16 and 18 percent. Contributing to the increase is the inclusion of Travel Channel International expenses and a decision by the company to accelerate marketing and promotional programs to further drive audience growth at its lifestyle networks.

The company's effective tax rate is expected to be between 28 and 30 percent. The effective rate has been favorably affected by changes in the allocation of income to various U.S. and international tax jurisdictions.

The company reaffirmed its other previously issued guidance of:

  • Programming expenses expected to increase 13 percent to 15 percent.
  • Depreciation and amortization, $100 million to $110 million.
  • Interest expense, $45 million to $50 million.
  • Non-controlling share of net income, $170 million to $180 million.
  • Capital expenditures, $60 million to $70 million.

My analysis

The stock has met its bullish $62 price target from the Point and Figure chart. There has been steady insider selling since March 2012. There has not been any insider buying since March 2012. The stock is trading at a forward P/E ratio of 16.33. The stock is currently at all time high levels. I would recommend only a small short position in the stock currently.

2. Roper Industries (ROP) is a diversified growth company and is a constituent of the S&P 500, Fortune 1000, and the Russell 1000 indices. Roper provides engineered products and solutions for global niche markets, including water, energy, transportation, medical, education, and SaaS-based information networks.


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Insider sells

  • John Humphrey sold 53,200 shares on September 13-14 pursuant to a 10b5-1 Trading Plan. John Humphrey is Chief Financial Officer of the company.
  • Brian Jellison sold 200,000 shares on September 11-13 and currently holds 983,270 shares of the company. Brian Jellison serves as Chairman, President and Chief Executive Officer of the company.

Financials

The company reported the second-quarter financial results on July 30 with the following highlights:

Revenue $724.9 million
Net income $114.8 million
Cash $518.9 million

Outlook

Roper is increasing its full year adjusted diluted earnings per share guidance to $4.84 - $5.00 from $4.75 - $4.91, reflecting a ($0.04) reduction due to currency and $0.12 - $0.14 accretion from the acquisition of Sunquest. The company's guidance excludes acquisition-related expenses, debt extinguishment charges and the impact of any future acquisitions. The company's guidance includes the recognition of Sunquest's deferred revenue, a portion of which will be excluded under GAAP's purchase accounting rules which will require the deferred revenue to be reduced to fair value upon the acquisition.

My analysis

The stock has a $139 price target from the Point and Figure chart. There have been steady insider selling since June 2010. There has only been one insider buy transaction since June 2010. The stock is trading at a forward P/E ratio of 18.43. I would recommend waiting until the $139 price target is hit before shorting the stock.

3. Drew (DW), through its wholly-owned subsidiaries, Kinro and Lippert Components, supplies a broad array of components for RVs, manufactured homes, modular housing, truck caps and buses, and trailers used to haul boats, livestock, equipment and other cargo. Currently, from 30 factories located throughout the United States, Drew serves most major national manufacturers of RVs and manufactured homes.


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Insider sells

Edward Rose sold 183,959 shares on September 13-17 and currently controls 1,165,034 shares of the company. Edward Rose serves as a director of the company.

Financials

The company reported the second-quarter financial results on August 2 with the following highlights:

Revenue $251.0 million
Net income $11.7 million
Cash $42.5 million

My analysis

The stock has a bearish $20 price target from the Point and Figure chart. There have been steady insider selling since March 2010. There has not been any insider buying since at least March 2010. The stock is trading at a forward P/E ratio of 13.51. I believe there could be an opportunity for a short entry with $20 price target. The stop loss could be placed at $31.

4. Gilead Sciences (GILD) is a biopharmaceutical company that discovers, develops and commercializes innovative therapeutics in areas of unmet medical need. The company's mission is to advance the care of patients suffering from life-threatening diseases worldwide. Headquartered in Foster City, California, Gilead has operations in North America, Europe and Asia Pacific.


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Insider sells

  • Kristen Metza sold 90,000 shares on September 13. Ms. Metza joined Gilead Sciences as Vice President, Human Resources in 2006 and was promoted to her current role in July 2007. As Senior Vice President, Human Resources, she is responsible for designing and implementing HR strategies and programs that attract, develop and retain talent for a high-performing workforce.
  • John Martin sold 145,450 shares on September 4 and currently holds 1,989,938 shares of the company. Dr. Martin joined Gilead Sciences in 1990 and currently serves as Chairman of the Board of Directors and Chief Executive Officer.
  • John Milligan sold 140,000 shares on September 4 and currently holds 259,007 shares of the company. Dr. Milligan joined Gilead Sciences in 1990 as a research scientist and was made Director of Project Management and Project Team Leader for the Gilead Hoffmann-La Roche (RHHBY.OB) Tamiflu collaboration in 1996. In 2002, Dr. Milligan was appointed Chief Financial Officer. He was named Chief Operating Officer in 2007 and President in 2008.
  • Gregg Alton sold 22,000 shares on September 4 and currently holds 37,790 shares of the company. Gregg Alton joined Gilead Sciences in 1999. From 2000 to 2009 he served as General Counsel. In his current role, Mr. Alton is responsible for legal affairs, corporate compliance and quality, government affairs, medical affairs, public affairs and international access activities.

Financials

The company reported the second-quarter financial results on July 26 with the following highlights:

Revenue $2.4 billion
Net income $711.6 million
Cash $2.27 billion

My analysis

The stock has a $95 price target from the Point and Figure chart. There have been steady insider selling since February 2012. There has only been one insider buy transaction since February 2012. The stock is trading at a forward P/E of 15.06. I would recommend waiting until the $95 level before shorting the stock.

5. Allison Transmission (ALSN) is the world's largest manufacturer of fully-automatic transmissions for medium- and heavy-duty commercial vehicles, medium- and heavy-tactical U.S. military vehicles and hybrid-propulsion systems for transit buses. Allison transmissions are used in a variety of applications including on-highway trucks (distribution, refuse, construction, fire and emergency), buses (primarily school and transit), motor homes, off-highway vehicles and equipment (primarily energy and mining) and military vehicles (wheeled and tracked). Founded in 1915, the Allison business is headquartered in Indianapolis, Indiana, U.S.A. and employs approximately 2,800 people. Allison has manufacturing facilities and customization centers located in China, The Netherlands, Brazil, India and Hungary. With a global presence, serving customers in North America, Europe, Asia, Australia, South America, and Africa, Allison also has over 1,500 independent distributor and dealer locations worldwide.


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Insider sells

Laurie Tuttle sold 194,654 shares on September 13-14 pursuant to a Rule 10b5-1 trading plan adopted by the reporting person on August 30, 2012. Ms. Tuttle joined Allison in January 1986. She currently serves as Vice President, Hybrid Programs, a position she has held since 2009.

Financials

The company reported the second-quarter financial results on July 30 with the following highlights:

Revenue $559.4 million
Net income $412.8 million
Adjusted net income $87 million
Cash $112.1 million

Outlook

Allison expects 2012 net sales growth in the range of 1 to 3 percent and an Adjusted EBITDA margin in the range of 33.5 to 34.0 percent. Adjusted Free Cash Flow is expected to be in the range of $350 to $375 million, or $1.85 to $2.00 per diluted share. Capital expenditures are expected to be in the range of $115 to $130 million subject to timely completion of development and sourcing milestones for new product programs. Cash income taxes are expected to be in the range of $10 to $15 million.

My analysis

The stock has a $25.5 price target from the Point and Figure chart. There have been seven insider sell transactions and seven insider buy transactions this year. The stock is trading at a forward P/E ratio of 7.30. I would recommend waiting until the $25.5 price target is hit before shorting this stock.

6. Delek US Holdings (DK) is an integrated downstream energy business focused on petroleum refining, the wholesale distribution of refined products and convenience store retailing. The refining segment consists of refineries operated in Tyler, Texas and El Dorado, Arkansas with a combined nameplate production capacity of 140,000 barrels per day. The marketing and supply segment markets refined products through a series of owned and third-party product terminals and pipelines. The retail segment supplies fuels and merchandise through a network of approximately 374 company-operated convenience store locations operated under the MAPCO Express, MAPCO Mart, East Coast, Fast Food and Fuel, Favorite Markets, Delta Express and Discount Food Mart brand names.


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Insider sells

Ezra Uzi Yemin sold 144,009 shares on September 13 and currently holds 504,845 shares of the company. The shares were sold in a block trade. Ezra Uzi Yemin has served as chief executive officer of the company since June 2004 and as president and a director since April 2001.

Financials

The company reported the second-quarter financial results on August 8 with the following highlights:

Revenue $2.1 billion
Net income $67.8 million
Cash $321.1 million

My analysis

The stock has met its $27 price target from the Point and Figure chart. There have been steady insider selling since January 2012. The latest insider buy transaction was in August 2011. The stock is trading at a forward P/E ratio of 8.46. The stock is trading currently very close to its all time high levels. I would recommend only a small short position in the stock based on the low forward P/E ratio.

7. Ameriprise Financial (AMP) has been helping people feel confident about their financial future since 1894. With outstanding asset management, advisory and insurance capabilities and a nationwide network of 10,000 financial advisors, the company has the strength and expertise to serve the full range of individual and institutional investors' financial needs.


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Insider sells

  • John Junek sold 45,477 shares on September 13 pursuant to a Rule 10b5-1 trading plan adopted by the reporting person on August 13, 2012. John Junek is Executive Vice President and General Counsel of the company.
  • Neal Maglaque sold 34,065 shares on September 14. Neal Maglaque is President, Advice & Wealth Management Business Development and Chief Operating Officer of the company.
  • Deirdre McGraw sold 5,716 shares on September 14. Deirdre McGraw is responsible for corporate communications to more than 20,000 employees and advisors and external communications with shareholders, the public and media.

Financials

The company reported the second-quarter financial results on July 25 with the following highlights:

Revenue $2.5 billion
Net income $224 million
Cash $2.7 billion

My analysis

The stock has a $85 price target from the Point and Figure chart. There have been 26 insider sell transactions and one insider buy transaction this year. The stock is trading at a forward P/E ratio of 8.88. I would recommend waiting until the $85 price target is hit before shorting the stock.

Source: Top 7 Insider Sells Filed On September 17