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

by: GuruFundPicks

We present here noteworthy insider trades from Tuesday's (March 27, 2012) SEC Form 4 (insider trading) filings in the healthcare and technology sectors, as part of our daily and weekly coverage of insider trades. These were selected by a review of over 265 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):

Apple Inc. (NASDAQ:AAPL): Probably among the most innovative companies the world has ever known, this maker of the iPhone, iPod and iPad, founded by the late Steve Jobs, is one of the world's largest manufacturers of personal computers, mobile communication devices, and portable digital music players. On Tuesday, three insiders filed SEC Forms 4 indicating that they exercised options to acquire 0.47 million shares and sold 0.25 million of those shares for $150.7 million, pursuant to 10b5-1 plans. The sellers included CEO Timothy Cook (106,640 shares), SVP Philip Schiller (64,151 shares), and SVP Peter Oppenheimer (80,147 shares). In comparison, AAPL insiders sold only an additional 0.24 million shares in the past year.

We have written about our bullish outlook on AAPL several times before. The stock, one of the strongest long-term performers in the market, is up a massive almost forty-fold in the past decade and currently trades near all-time highs. Surprisingly, this gem of a company can still be bought for 12-13 forward P/E compared with 9.2 average for its peers in the micro-computer group, while earnings are projected to increase at a compound 34.3% annualized rate from $27.68 in 2011 to $49.89 in 2013, compared with the average 5%-10% growth rates for many of its peers in the group. Furthermore, forward FY 2013 annual earnings estimates have gone up steadily from $38.98 just 90 days ago to $49.89, as have broker upgrades and price targets that have kept pouring in since the blockbuster Q1 (December) report two months ago. It appears that as large as these sales are, they may just be prudent profit-taking from senior executives diversifying out of AAPL as it continues its march upward to giddying heights.

Amarin Corp. (NASDAQ:AMRN): AMRN is a clinical stage Ireland-based global pharmaceutical group, which develops novel drugs for the treatment of cardiovascular diseases using its proprietary advanced oral and trans-dermal drug delivery technologies. On Tuesday, CEO Joseph Zakrzewski filed SEC Form 4 indicating that he exercised options and sold the resulting 160,000 shares for $1.9 million, ending with 78,604 shares after the sale (not including derivative securities). In comparison, insiders sold 0.64 million shares in the past year.

AMRN shares are consolidating at their highs this week after spiking higher in the prior week, prior to and just after the company announced last Tuesday that the USPTO (U.S. Patent and Trademark Office) published notification of a Notice of Allowance for its '598 patent for AMR-101, a prescription grade omega-3 fatty acid for the treatment of patients with very high triglyceride levels that are at increased risk for developing coronary artery disease. The issuance of the Notice of Allowance is a significant step toward the commercialization of AMR-101, and the street is rife with speculation of partnering possibilities, or even an outright acquisition at a stiff premium to current prices in the $11-$12 range. Furthermore, MKM partners last Wednesday reiterated its buy and $20 price target on AMRN.

Google Inc. (NASDAQ:GOOG): GOOG is the Internet's premier search engine. On Tuesday, two insiders filed SEC Forms 4 indicating that they sold 45,025 shares for $29.3 million, pursuant to 10b5-1 plans. Of these 45,000 shares were sold by Director Kavitark Shriram, who ended with 0.6 million shares after the sale in direct and indirect holdings. GOOG insiders in comparison sold 2.3 million shares in the past year. However, the vast majority of these sales were by co-founders Lawrence Page and Sergey Brin; the $29.3 million sales cited above ranks among the largest insider sales at GOOG other than the ones by its two co-founders.

GOOG currently trades at all-time highs, and at 12-13 forward P/E and 3.3 P/B, a discount compared with averages of 16-17 and 1.6 for its closest peer Yahoo! Inc. (YHOO), while earnings are projected to grow at a stellar (for a company this size) 17.5% annual rate from $36.06 in 2011, to $49.81 in 2013, compared with the sub-10% annual earnings growth rate for YHOO. The stock has been an excellent long-term performer, up almost six-fold since its IPO in 2004. It is likely that it will continue outperforming the market going forward.

Elite Pharmaceuticals (OTCQB:ELTP): ELTP specializes in the development of oral controlled release products, such as delayed, sustained, targeted and pulsatile release tablets, pellets, capsules, granules, and powders, with a focus on the therapeutic areas of pain management, allergy, cardiovascular and infection. On Tuesday, corporate and institutional insiders filed SEC Forms 4 that they sold 2.9 million shares for $0.3 million. This included 0.2 million shares sold by CFO Carter Ward, who ended with 0.52 million shares after the sale, and the remaining 2.7 million shares sold by Epic Pharma LLC.

On top of these, some additional large insider sales reported on Tuesday in the healthcare and technology sectors include:

  • a $6.8 million sale by CFO William Hayes, pursuant to a 10b5-1 plan, at Laboratory Corp. (NYSE:LH), one of the largest independent clinical lab companies in the U.S. with a national network of 51 primary labs and over 1,700 service sites;
  • a $4.2 million sale by two insiders, pursuant to 10b5-1 plans, at Varian Medical Systems (NYSE:VAR), that develops oncology systems and equipment used in radiation therapy and x-ray imaging components and sub-systems;
  • a $4.0 million sale by EVP George Yancopoulos, pursuant to a 10b5-1 plan, at Regeneron Pharmaceutical (NASDAQ:REGN), a developer of medicines for the treatment of serious medical conditions, with two products, ARCALYST and EYLEA, on the market, and additional in development to treat inflammatory conditions, allergic and immune conditions, and cancer; and
  • a $1.5 million sale by Director William Morean, pursuant to a 10b5-1 plan, at contract electronics manufacturer Jabil Circuit Inc. (NYSE:JBL).

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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