Analyzing Monday's Noteworthy Insider Trades

by: GuruFundPicks

We present here two noteworthy insider buys and nine noteworthy insider sells from Monday's (April 16th, 2012) over 205 separate SEC Form 4 (insider trading) filings, 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 (for more info on how to interpret insider trades, please refer to the end of this article):

Mylan Inc. (MYL): MYL is one of the world's leading developers of generic and branded drugs, providing products that cover a vast array of therapeutic categories to customers in over 150 countries and territories. Also, through its India-based subsidiary, it is also one of the world's largest manufacturers of active pharmaceutical ingredients. On Monday, Executive Chairman Robert Coury filed SEC Form 4, indicating that he exercised options and sold the resulting 150,000 shares for $3.3 million, pursuant to a 10b5-1 plan, and ending with 0.94 million shares after the sale. Insider selling has picked up at MYL since the beginning of the year, with 0.94 million shares sold by insiders YTD, in comparison to a total of 1.19 million shares sold in the past year.

The pickup in selling is happening as MYL shares are consolidating at their highs, after reporting a good Q4 in February in which the company beat analyst earnings estimates (53c v/s 50c) and missed revenue estimates ($1.53 billion v/s $1.56 billion). Its shares currently trade at 8-9 forward P/E and 2.7 P/B compared to the averages of 13.2 and 2.9 for its peers in the generics drug group, while earnings are projected to rise at a 14.4% annual rate from $2.04 in 2011 to $2.67 in 2013.

Netsol Technologies Inc. (NTWK): NTWK is a provider of enterprise software and IT services for the automobile finance and leasing, banking, healthcare, and financial services industries worldwide. On Monday, three insiders filed SEC Forms 4 indicating that they purchased 150,000 shares each, or a total of 0.45 million shares for $0.2 million. The sellers included Naeem Ghauri, Najeeb Ghauri, and Salim Ghauri, increasing their holdings to 1.3 million, 2.4 million and 2.1 million shares respectively after the purchase. In comparison, insiders purchased a total of 0.77 million shares in the past year.

NTWK shares were among the biggest losers in 2011, suffering a crippling fall of more than 70%, and are currently trading near all-time lows. Profits have been pummeled from a 12c profit in FY ending June 2011 to a current 2c on a TTM (trailing-twelve month basis), and are projected to come in at 3c for FY 2013. The stock recently fell at the beginning of March after the company announced a 14.5 million share dilutive offering.

Paychex Inc. (PAYX): PAYX provides payroll, human resource and employee benefits outsourcing services via more than 100 offices in the U.S. On Monday, CEO Martin Mucci filed SEC Form 4 indicating that he exercised options and sold the resulting 15,000 shares for $0.47 million, ending with 65,451 shares in direct and indirect holdings after the sale (not including derivative holdings). Insider selling is uncommon at PAYX, and in fact insiders sold only a total of 30,362 shares in the past year.

PAYX reported an in-line Q3 (ending February) just over two weeks ago, at the end of March, with both revenue and earnings coming in-line, and the company also reaffirmed its guidance for FY 2012. Meanwhile, its shares are consolidating gains, trading in a narrow 10% band, after a 30% rise from the lows in the second half of 2011, and they trade at a current 20.8 P/E on a TTM basis, and at 7.0 P/B, compared to averages of 15.2 and 2.0 for its peers in the outsourcing group.

On top of these, some additional large insider sales on Monday include:

  • a $7.6 million sale by Chairman of the Board and 10% owner Paul Foster, including the sale of 300,000 shares in direct holdings, and another 100,000 shares that he indirectly held via Franklin Mountain Investments Ltd. Partnership, at Western Refining Inc. (WNR), that refines and markets crude oil and refined products in West TX, AZ, NM, UT, CO and the mid-Atlantic region;
  • a $6.5 million sale by two insiders at Tractor Supply Co. (TSCO), a specialty retailer that operates retail farm and ranch stores in the U.S.;
  • a $4.0 million sale by Director Bernard Cammarata at The TJX Companies Inc. (TJX), a leading off-price apparel and home fashions retailer in the U.S. and internationally;
  • a $3.9 million sale by COO Scott Stephenson at leading provider of risk assessment solutions Verisk Analytics (VRSK);
  • a $2.1 million sale by EVP Samuel Maclin at JP Morgan Chase & Co. (JPM), a global financial company providing private, commercial, and investment banking and treasury services in over 60 countries;
  • a $1.2 million sale by President Allen Sirkin at PVH Corp. (PVH), that designs and markets men's, women's and children's dress shirts, sportswear, footwear, accessories, and other related products; and
  • a $1.0 million sale by EVP Judith Newman at Scholastic Corp. (SCHL), that publishes and distributes children's books, textbooks, magazines, and teacher/education materials.

Furthermore, insiders also reported a noteworthy buy on Monday in Alcoa Inc. (AA), that is engaged in the production and management of aluminum, fabricated aluminum, and alumina, in which Director Martin Sorrell purchased 1,848 shares for $18,197, in addition to the purchase of 1,830 shares by India's leading industrialist and Chairman of Tata Group, Ratan Tata, that we reported just last week, and in comparison to 10,071 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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