Analyzing Friday's Noteworthy Insider Trades In Healthcare And Tech Sectors

by: GuruFundPicks

We present here two noteworthy buys and six noteworthy sells from Friday's (March 16th, 2012) SEC Form 4 (insider trading) filings in the healthcare and tech sectors, as part of our daily and weekly coverage of insider trades. These were selected by a review of over 360 separate SEC Form 4 transactions filed by insiders on Friday. 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):

LSI Corp. (NASDAQ:LSI-OLD): LSI is a designer of complex high-performance ICs and storage systems. Its silicon-to-systems solutions are at the heart of products that create, store, consume and transport digital information. Its ICs are used in hard disk and solid state drives, high-speed communications and storage systems, computer servers and PCs. On Friday, CEO Abhijit Talwalkar filed SEC Form 4 indicating that he exercised options to acquire 896,693 shares and sold those and an additional 200,000 shares for $9.6 million, pursuant to a 10b5-1 plan, and ended with 0.34 million shares after the sale (not including derivative holdings). In comparison, insiders sold 3.53 million shares in the past year.

LSI last Wednesday raised Q1 revenue and earnings guidance ($585-$615 million and 12c-16c v/s prior guidance of $550-$590 million and 9c-15c), aided by better than expected strength in the hard disk drive market and its flash-based products. The shares have rallied to near five-year highs, and currently trade at 11-12 forward P/E and 4.8 P/B compared to averages of 17.4 and 1.9 for its peers in the electronic components semiconductor group.

LifeVantage Corp. (NASDAQ:LFVN): LFVN is engaged in the development of nutraceutical dietary supplements, with its primary product being Protandim that combats oxidative stress by enhancing the body's natural antioxidant protection at the genetic level, and it also offers TrueScience that is an anti-aging skin care product. On Friday, Director Michael Beindorff filed SEC Form 4 indicating that he purchased 92,000 shares for $0.24 million, a new position for him in his portfolio. In comparison, insiders purchased only an additional 5,061 shares in the past year.

LFVN shares have more than doubled since the beginning of February, with the rally starting in advance of the appearance by its spokesperson, famous American singer, musician, actor, dancer and radio personality Donny Osmond, on the Dr. Phil show on February 8th, during which he shared that one of his "secrets" to his youthful appearance and vitality was Protandim. Subsequent to that, shares rallied again after the company released an outstanding Q2 (December quarter), in which revenues at $25.3 million were up 239% year-over-year, and it also raised revenue and operating margin guidance for FY 2012. Also, on February 10th, LFVN submitted an application under Rule 24b-2 requesting confidential treatment for information it excluded from the exhibits in its Q3 filing.

Alexion Pharmaceuticals (NASDAQ:ALXN): ALXN is a commercial-stage biotech focused on serving patients with severe and ultra-rare disorders. On Friday, SVP & Chief Legal Officer Thomas Dubin filed SEC Form 4 indicating that he exercised options and sold the resulting 65,912 shares for $5.9 million, ending with 62,023 shares (not including derivative holdings). In comparison, insiders sold 0.9 million shares in the past year.

ALXN shares have been among the strongest consistent performers in the biotech group, up almost three-fold in the last eighteen months, and up nearly forty-fold since the lows almost ten years ago. The appreciation has been based almost solely on the commercial success of its Soliris drug for the treatment of patients with paroxysmal nocturnal hemoglobinuria, a blood disorder, and atypical hemolytic uremic syndrome, an ultra-rare and life-threatening genetic disease. In the latest Q4 report earlier this month, on February 9th, it beat earnings (41c v/s 33c) and revenues ($228 million v/s $221 million).

Furthermore, analysts are projecting strong earnings growth from $1.38 in 2011 to $2.46 in 2013 at an annual rate of 33.5%, while the stock trades at a 36-37 forward P/E and 14.6 P/B compared to averages of 62.9 and 10.2 for its peers in the biotech group. While the stock has attractive growth and a reasonable valuation, it is very extended technically. As such, we would wait for a pullback into the low- to mid-$70s before buying.

On top of these, some additional large insider sales reported on Friday in the healthcare & tech sectors, including:

  • an $8.5 million sale by two insiders at Universal Health Services, Inc. (NYSE:UHS), an owner and operator of acute care hospitals, behavioral health centers, surgical hospitals, ambulatory surgery centers, and radiation oncology centers in the U.S. and Puerto Rico;
  • a $2.0 million sale by four insiders at Myriad Genetics (NASDAQ:MYGN), a developer of molecular diagnostic products that analyze genes and their mutations to assess risk of cancer and diseases, with 66,000 of the 80,600 shares sold under 10b5-1 plans;
  • a $1.6 million sale by SVP Jan Becker at Autodesk Inc. (NASDAQ:ADSK), a leading provider of computer-aided design software applications; and
  • a $1.0 million sale by two insiders, pursuant to 10b5-1 plans, at Nuance Communications (NASDAQ:NUAN), a leading provider of speech and imaging solutions for businesses and consumers worldwide.

Furthermore, insiders also reported noteworthy buys on Friday in the healthcare & tech sectors, including:

  • Synergistics USA Inc. (OTCQB:SURG), a developer of micro-surgical instruments for use in ophthalmic surgery and neurosurgical applications, in which CEO David Hable purchased 4,000 shares for $23,440, ending with 81,531 shares after the sale, and in comparison to 8,500 shares purchased by insiders in the past year.

Credit: Fundamental data in this article were based on SEC filings, Zacks Investment Research, Thomson Reuters and 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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