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Insider Trading 08 March 2013: Carl Icahn’s Herbalife Purchase Drives Insider Buying

March 11th, 2013
in contributors

by Asif Suria

Insider buying more than quadrupled with insiders purchasing $107.58 million of their stock last week compared to $25.02 million in the week prior. However most of this increase was driven by Carl Icahn’s $82.75 million purchase of Herbalife as discussed below. Selling also increased with insiders selling $1.99 billion of stock last week compared to $1.64 billion in the week prior. A large part of this increase was related to Blackstone’s $356.4 million sale of General Growth Properties (GGP) and Vornado’s $160.3 million sale of J.C. Penney (JCP).

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 18.53. In other words, insiders sold more than 18 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 65.7.

Follow up:

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.

Insider Sell Buy Ratio March 8, 2013

Insider Sell Buy Ratio March 8, 2013

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. Herbalife Ltd. (HLF): $41.5

10% Owner Carl C. Icahn acquired 2,017,264 shares, paying $41.02 per share for a total amount of $82.75 million. These shares were acquired by various Icahn related entities.

We normally do not highlight purchases by 10% owners but decided to make an exception in this case. Herbalife recently agreed to add two of Icahn’s representatives to its board and this purchase is just the latest salvo in Icahn’s battle with Bill Ackman, who announced his short position in Herbalife with a 342-slide presentation last year.

You can view the list of recent insider transactions for Herbalife Ltd. here.

P/E: 10.25 Forward P/E: 7.66 Industry P/E: 8.74
P/S: 1.04 Price/Book: 10.42 EV/EBITDA: 5.83
Market Cap: $4.28B Avg. Daily Volume: 10,682,500 52 Week Range: $24.24 – $73

2. NuStar Energy L.P. (NS): $50.04

Shares of this oil & gas pipeline company were acquired by 2 insiders:

  • Director William E. Greehey acquired 85,000 shares, paying $48.12 per share for a total amount of $4.09 million. Mr. Greehey increased his stake by 4.08% to 2,167,577 shares with this purchase.
  • Director Jesse D. Bates acquired 1,000 shares, paying $47.18 per share for a total amount of $47,180. These shares were purchased indirectly through a trust.

Barron’s had an interesting article ($$) this week about the big oil boom in the United States benefiting pipeline and railroad companies.

You can view the list of recent insider transactions for NuStar Energy L.P. here.

P/E: N/A Forward P/E: 17.62 Industry P/E: 25.13
P/S: 0.65 Price/Book: 1.49 EV/EBITDA: 15.15
Market Cap: $3.90B Avg. Daily Volume: 446,882 52 Week Range: $38.43 – $60.53

3. United Insurance Holdings Corp. (UIHC): $5.68

Shares of this property and casualty insurance company were acquired by 3 insiders:

  • Director Gregory C. Branch acquired 100,000 shares, paying $5.23 per share for a total amount of $523,000. Mr. Branch increased his stake by 7.00% to 1,529,197 shares with this purchase.
  • Director William Hood III acquired 100,000 shares, paying $5.23 per share for a total amount of $523,000. These shares were purchased indirectly through a trust.
  • Director Alec Poitevint II acquired 100,000 shares, paying $5.23 per share for a total amount of $523,000. These shares were purchased indirectly by SEM Minerals, LP, a limited partnership whose General Partner is SEM Minerals, Inc., of which Reporting Person is the Chairman and President.

These three purchases look like duplicates but when we looked at the filings, they do appear to be independent purchases. We were also not able to find any information about a secondary offering, which often explains the same purchase price.

You can view the list of recent insider transactions for United Insurance Holdings Corp. here.

P/E: 6.24 Forward P/E: 4.73 Industry P/E: N/A
P/S: 0.68 Price/Book: 1.01 EV/EBITDA: 1.56
Market Cap: $87.74M Avg. Daily Volume: 98,762 52 Week Range: $4.6 – $6.26

4. Opko Health, Inc. (OPK): $7.48

CEO & Chairman Phillip Frost M.D. acquired 203,000 shares of this medical devices and drug development company, paying $7.25 per share for a total amount of $1.47 million. These shares were purchased indirectly by 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: 32.11
P/S: 60.24 Price/Book: 14.96 EV/EBITDA: -82.7
Market Cap: $2.23B Avg. Daily Volume: 2,509,640 52 Week Range: $4 – $7.54

5. American Realty Capital Properties, Inc. (ARCP): $14.37

Shares of this commercial real estate company were acquired by 3 insiders:

  • Chairman of the Board of Directors and Chief Executive Officer Nicholas S. Schorsch acquired 50,000 shares, paying $12.56 per share for a total amount of $627,875.
  • Director William M. Kahane acquired 50,000 shares, paying $12.56 per share for a total amount of $627,875.
  • Chief Operating Officer Brian D. Jones acquired 2,000 shares, paying $12.64 per share for a total amount of $25,280.

You can view the list of recent insider transactions for American Realty Capital Properties, Inc. here.

P/E: N/A Forward P/E: 47.9 Industry P/E: N/A
P/S: 9.37 Price/Book: 1.92 EV/EBITDA: 45.12
Market Cap: $160.33M Avg. Daily Volume: 1,026,660 52 Week Range: $9.77 – $14.82

You can view the full list of purchases from this Insider Buying page.

Notable Insider Sales:

1. Starbucks Corporation (SBUX): $58.67

Shares of Starbucks were sold by 2 insiders:

  • Chairman, President and CEO Howard D. Schultz sold 1,000,000 shares for $57.13, generating $57.13 million from the sale.
  • Director Craig Weatherup sold 39,396 shares for $54.78, generating $2.16 million 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 Starbucks Corporation here.

P/E: 31.56 Forward P/E: 22.48 Industry P/E: N/A
P/S: 3.19 Price/Book: 8.44 EV/EBITDA: 15.94
Market Cap: $43.96B Avg. Daily Volume: 6,065,240 52 Week Range: $43.04 – $62

2. Monster Beverage Corporation (MNST): $47.34

Shares of this beverages company were sold by 2 insiders:

  • Vice Chairman and President Hilton H. Schlosberg sold 459,883 shares for $48.73, generating $22.41 million from the sale.
  • Chairman and CEO Rodney C. Sacks sold 459,752 shares for $48.73, generating $22.41 million from the sale.

You can view the list of recent insider transactions for Monster Beverage Corporation here.

P/E: 25.45 Forward P/E: 17.66 Industry P/E: 14.81
P/S: 3.84 Price/Book: 12.28 EV/EBITDA: 13.38
Market Cap: $7.84B Avg. Daily Volume: 2,120,290 52 Week Range: $39.99 – $83.96

3. Copart, Inc. (CPRT): $31.85

Shares of this online auctions and vehicle remarketing services provider were sold by 2 insiders:

  • Chief Executive Officer Jayson A. Adair sold 496,460 shares for $33.87, generating $16.81 million from the sale. These shares were sold indirectly through a trust.
  • Director Steven D. Cohan sold 100,000 shares for $33.47, generating $3.35 million 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 Copart, Inc. here.

P/E: 22.24 Forward P/E: 17.6 Industry P/E: 29.24
P/S: 4.13 Price/Book: 6.03 EV/EBITDA: 13.61
Market Cap: $3.99B Avg. Daily Volume: 916,008 52 Week Range: $22.59 – $37.47

4. Regeneron Pharmaceuticals, Inc. (REGN): $172.97

President & CEO Leonard S. Schleifer sold 91,683 shares of this biotech company for $175.33, generating $16.08 million from the sale.

You can view the list of recent insider transactions for Regeneron Pharmaceuticals, Inc. here.

P/E: 25.61 Forward P/E: 30.29 Industry P/E: 14.49
P/S: 12.06 Price/Book: 13.34 EV/EBITDA: 33.86
Market Cap: $16.72B Avg. Daily Volume: 816,051 52 Week Range: $107.31 – $188.95

5. AXIS Capital Holdings Limited (AXS): $40.96

CEO, AXIS Insurance John Gressier sold 370,064 shares of this insurance company for $40.08, generating $14.83 million from the sale.

You can view the list of recent insider transactions for AXIS Capital Holdings Limited here.

P/E: 10.24 Forward P/E: 9.73 Industry P/E: 12.17
P/S: 1.27 Price/Book: 0.91 EV/EBITDA: 8.54
Market Cap: $5.00B Avg. Daily Volume: 830,041 52 Week Range: $30.6 – $41.34

You can view the full list of sales from this Insider Sales page.









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