July 2nd, 2012
by Asif Suria
Insider buying more than doubled with insiders purchasing $37.2 million of their stock last week compared to $17.9 million in the week prior. Selling declined sharply with insiders selling $340.6 million worth of stock last week compared to $917.9 million in the week prior. There was heavy insider buying in the energy sector, especially oil and gas services, and three out of the top 5 insider purchases listed below are from that sector.
Sell/Buy Ratio: The insider Sell/Buy ratio is calculated by dividing the total insider sales in a given week by total insider purchases that week. The adjusted ratio for last week dropped down to 9.1. In other words, insiders sold more than 9 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the week prior when the ratio stood at 51.1. We are calculating an adjusted ratio by removing transactions by funds and companies and trying as best as possible only to retain information about insiders and 10% owners who are not funds or companies.
Note: As mentioned in the first post in this series, certain industries have their preferred metrics such as same store sales for retailers, funds from operations (FFO) for REITs and revenue per available room (RevPAR) for hotels that provide a better basis for comparison than simple valuation metrics. However metrics like Price/Earnings, Price/Sales and Enterprise Value/EBITDA included below should provide a good starting point for analyzing the majority of stocks.
Notable Insider Buys:
1. Energy Transfer Equity, L.P. (ETE): $41.02
Director Kelcy L. Warren acquired 239,975 shares of this oil & gas pipelines company, paying $39.48 per share for a total amount of $9.5 million. These shares were purchased indirectly by Kelcy Warren Partners II, L.P.
You can view the list of recent insider transactions for Energy Transfer Equity, L.P. here.
|P/E: 23.85||Forward P/E: 16.15||Industry P/E: 19.38|
|P/S: 1.4||Price/Book: 4.6||EV/EBITDA: 16.69|
|Market Cap: $11.48B||Avg. Daily Volume: 1,169,700||52 Week Range: $30.78 – $45.42|
2. Chesapeake Energy Corporation (CHK): $18.6
Shares of this oil and natural gas producer were acquired by 2 insiders:
- Director Merrill A. Miller acquired 27,700 shares, paying $18.00 per share for a total amount of $498,462. Mr. Miller increased his stake by 21.09% to 159,017 shares with this purchase.
- Director Brad R. Martin acquired 20,000 shares, paying $17.75 per share for a total amount of $355,000. Mr. Martin increased his stake by 57.14% to 55,000 shares with this purchase.
This is the third insider purchase at Chesapeake since the “governance crisis” and the subsequent sharp decline in the stock.
You can view the list of recent insider transactions for Chesapeake Energy Corporation here.
|P/E: 7.48||Forward P/E: 11.41||Industry P/E: 14.69|
|P/S: 0.92||Price/Book: 0.85||EV/EBITDA: 5.25|
|Market Cap: $11.94B||Avg. Daily Volume: 35,555,800||52 Week Range: $13.32 – $35.75|
3. Opko Health, Inc. (OPK): $4.6
CEO & Chairman Phillip Frost M.D. acquired 150,000 shares of this medical devices and drug development company, paying $4.58 per share for a total amount of $686,872. These shares were purchased indirectly by Frost Gamma Investments Trust.
You can view the list of recent insider transactions for Opko Health, Inc. here.
|P/E: N/A||Forward P/E: N/A||Industry P/E: 20.09|
|P/S: 45.65||Price/Book: 8.78||EV/EBITDA: -61.01|
|Market Cap: $1.36B||Avg. Daily Volume: 1,385,820||52 Week Range: $3.49 – $5.85|
4. The Children’s Place (PLCE): $49.83
Director Norman S. Matthews acquired 15,000 shares of this children’s clothing retailer, paying $44.57 per share for a total amount of $668,550. Mr. Matthews increased his stake by 39.46% to 53,014 shares with this purchase.
Mr. Matthews is the Chairman of the Board at Children’s Place and has served on the board since 2009. He also picked up 21,200 shares last March at an average price of $47.29 as you can see from this page. The company was trading for 5.5 times EBITDA and less than 12 times free cash flow when we reported on this transaction last week. Considering the $1.8 billion price tag Bain Capital paid for competitor Gymboree in 2010 and using Gymboree’s free cash flow from the year ended January 2010, Bain paid a little over 13 times free cash flow for Gymboree.
You can view the list of recent insider transactions for The Children here.
|P/E: 17.48||Forward P/E: 13.18||Industry P/E: 17.33|
|P/S: 0.68||Price/Book: 1.89||EV/EBITDA: 6.22|
|Market Cap: $1.21B||Avg. Daily Volume: 566,570||52 Week Range: $36.96 – $57.55|
5. Basic Energy Services, Inc. (BAS): $10.32
Director Steven A. Webster acquired 50,000 shares of this oil and gas services provider, paying $8.77 per share for a total amount of $438,652. Mr. Webster increased his stake by 5.94% to 892,270 shares with this purchase.
Basic Energy Services provides drilling and well services to the oil and gas industry. Mr. Webster has been actively buying shares of the company since April, picking up 353,570 shares for a total of $3.92 million. He is also a director of oil services firm Hercules Offshore (HERO) and he picked up 50,000 shares of HERO at an average price of $3.38 last week. You can see all his transactions here. Two other directors also picked up shares of Basic Energy Services over the last two months. The company is profitable, trades for 3 times EBITDA and has a lot of debt on its balance sheet. We have been seeing heavy insider buying in the oil services sector over the last few weeks.
You can view the list of recent insider transactions for Basic Energy Services, Inc. here.
|P/E: 5.08||Forward P/E: 6.33||Industry P/E: 12.5|
|P/S: 0.3||Price/Book: 1.08||EV/EBITDA: 3.09|
|Market Cap: $423.27M||Avg. Daily Volume: 1,757,020||52 Week Range: $8.52 – $37.79|
You can view the full list of purchases from this Insider Buying page.
Notable Insider Sales:
1. Aaron’s, Inc. (AAN): $28.31
Chairman Charles R. Loudermilk Sr. sold 300,000 shares of this consumer electronics and household appliances retailer for $27.02, generating $8.1 million from the sale.
You can view the list of recent insider transactions for Aaron’s, Inc. here.
|P/E: 15.88||Forward P/E: 12.75||Industry P/E: 11.85|
|P/S: 1||Price/Book: 1.96||EV/EBITDA: 7.33|
|Market Cap: $2.15B||Avg. Daily Volume: 605,969||52 Week Range: $22.17 – $31.78|
2. Apollo Group Inc. (APOL): $36.19
Executive Chairman of the Board John G. Sperling sold 150,000 shares of this for-profit education company for $35.58, generating $5.3 million from the sale. These shares were sold indirectly through a trust.
You can view the list of recent insider transactions for Apollo Group Inc. here.
|P/E: 8.66||Forward P/E: 11.64||Industry P/E: 17.61|
|P/S: 0.92||Price/Book: 4.48||EV/EBITDA: 3.49|
|Market Cap: $4.10B||Avg. Daily Volume: 2,289,590||52 Week Range: $30.93 – $58.29|
3. Universal Insurance Holdings Inc. (UVE): $3.41
Chief Executive Officer Bradley I. Meier sold 1,500,000 shares of this property & casualty insurance company for $3.15, generating $4.7 million from the sale.
You can view the list of recent insider transactions for Universal Insurance Holdings Inc. here.
|P/E: 8.57||Forward P/E: N/A||Industry P/E: 12.97|
|P/S: 0.61||Price/Book: 0.86||EV/EBITDA: -9|
|Market Cap: $135.09M||Avg. Daily Volume: 88,488||52 Week Range: $3.31 – $4.84|
4. Target Corp. (TGT): $58.19
Executive Officer John D. Griffith sold 32,415 shares of this retail chain for $58.30, generating $1.9 million from the sale.
You can view the list of recent insider transactions for Target Corp. here.
|P/E: 13.43||Forward P/E: 11.95||Industry P/E: 24.84|
|P/S: 0.54||Price/Book: 2.39||EV/EBITDA: 7.38|
|Market Cap: $38.48B||Avg. Daily Volume: 4,954,490||52 Week Range: $45.28 – $59.4|
5. NetSuite Inc. (N): $54.77
Shares of this cloud enterprise software company were sold by 3 insiders:
- EVP & Chief Customer Officer Timothy Dilley sold 30,000 shares for $53.00, generating $1.6 million from the sale.
- CTO & Chairman of the Board Evan Goldberg sold 3,000 shares for $51.20, generating $153,606 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
- SVP, General Counsel & Secretary Douglas P. Solomon sold 2,500 shares for $53.55, generating $133,885 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
You can view the list of recent insider transactions for NetSuite Inc. here.
|P/E: N/A||Forward P/E: 161.09||Industry P/E: 20.65|
|P/S: 14.41||Price/Book: 26.5||EV/EBITDA: -216.42|
|Market Cap: $3.84B||Avg. Daily Volume: 491,239||52 Week Range: $25.32 – $54.8|
You can view the full list of sales from this Insider Sales page.
About the Author
Asif Suria is the founder and editor of Insider Trade Reports, a service that provides daily reports on insider activity and rates the top insider purchases and sales using a proprietary model. He also maintains a Merger Arbitrage tool that displays real-time spreads and covers mergers and acquisitions on a weekly basis.