November 5th, 2013
by Asif Suria
Insider buying increased sharply with insiders purchasing $114.05 million of their stock last week compared to $14.71 million in the week prior. Selling also increased with insiders selling $1.51 billion of stock last week compared to $1.09 billion in the week prior.
One of the more interesting insider transactions on the sell side that did not make the cut because it was an indirect sale through a fund was the $122.73 million sale of Netflix (NFLX) by top technology VC and founder of Technology Crossover Ventures (TCV) Jay Hoag. TCV has invested in Netflix over the years including the purchase of a $200 million convertible note from Netflix in 2011.
Mr. Hoag has been a director of the company since 1999. We highlighted his purchases of Netflix on two consecutive weeks in May 2012 when the stock was trading in the low $70s. He sold just shy of $100 million worth of stock when it hit $215.92 in April of this year and sold $122.73 million worth of stock this week. You can find all his insider transactions here. His sale follows Carl Icahn’s disposition of half his stake in Netflix last week.
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 went up to 13.22.In other words, insiders sold more than 13 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 74.57.
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 November 1, 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. Freeport-McMoRan Copper & Gold Inc. (FCX): $36.78
Vice Chairman of the Board James C. Flores acquired 1,500,000 shares of this mining company, paying $37.45 per share for a total amount of $56.17 million. These shares were purchased indirectly by a family limited partnership and Sable Management, L.P.
We continue to see purchases in the mining sector with insiders buying on weakness after the sector has posted double-digit losses this year when compared to a gain of 25.67% year-to-date by the S&P 500.
You can view the list of recent insider transactions for Freeport-McMoRan Copper & Gold Inc. here.
|P/E: 13.44||Forward P/E: 11.18||Industry P/E: 2.81|
|P/S: 1.95||Price/Book: 1.87||EV/EBITDA: 8.53|
|Market Cap: $38.18B||Avg. Daily Volume: 12,879,700||52 Week Range: $26.37 – $40.69|
2. AGCO Corporation (AGCO): $58.38
Director Mallika Srinivasan acquired 406,554 shares of this farm & construction machinery company, paying $57.61 per share for a total amount of $23.42 million. These shares were purchased indirectly by TAFE Motors and Tractors Limited.
You can view the list of recent insider transactions for AGCO Corporation here.
|P/E: 10.31||Forward P/E: 9.71||Industry P/E: 9.39|
|P/S: 0.53||Price/Book: 1.48||EV/EBITDA: 5.69|
|Market Cap: $5.69B||Avg. Daily Volume: 1,070,260||52 Week Range: $42.48 – $64.6|
3. ZIOPHARM Oncology, Inc. (ZIOP): $3.5
Director Randal J. Kirk acquired 2,857,143 shares of this biotech company, paying $3.50 per share for a total amount of $10 million. These shares were purchased indirectly by Intrexon Corporation.
This purchase is related to a secondary offering by the company and is not an open-market purchase. We decided to highlight the purchase because of Randal Kirk’s long track record investing in the biotech sector. The Forbes article titled “The Next Big Move For The Smartest Biotech Investor” provides an interesting overview of Mr. Kirk and his interest in Ziopharm.
You can view the list of recent insider transactions for ZIOPHARM Oncology, Inc. here.
|P/E: N/A||Forward P/E: N/A||Industry P/E: N/A|
|P/S: 367.34||Price/Book: 80.23||EV/EBITDA: -3.07|
|Market Cap: $291.38M||Avg. Daily Volume: 1,173,880||52 Week Range: $1.49 – $5.95|
4. Symantec Corporation (SYMC): $22.77
President and CEO Stephen M. Bennett acquired 100,000 shares of this software security and storage company, paying $22.06 per share for a total amount of $2.2 million. These shares were purchased indirectly through a trust.
You can view the list of recent insider transactions for Symantec Corporation here.
|P/E: 21.06||Forward P/E: 10.69||Industry P/E: N/A|
|P/S: 2.31||Price/Book: 2.81||EV/EBITDA: 8.82|
|Market Cap: $15.92B||Avg. Daily Volume: 6,545,790||52 Week Range: $17.38 – $27.1|
5. Air Products & Chemicals Inc. (APD): $108
Director Seifi Ghasemi acquired 15,000 shares of this atmospheric gases and performance materials provider, paying $108.09 per share for a total amount of $1.62 million.
Mr. Ghasemi joined Air Products’ board of directors in September. New directors often tend to purchase stock in the company and hence I would not read much into this purchase.
You can view the list of recent insider transactions for Air Products & Chemicals Inc. here.
|P/E: 23.05||Forward P/E: 16.54||Industry P/E: 12.2|
|P/S: 2.24||Price/Book: 3.49||EV/EBITDA: 12.04|
|Market Cap: $22.64B||Avg. Daily Volume: 1,257,380||52 Week Range: $77 – $114.75|
You can view the full list of purchases from this Insider Buying page.
Notable Insider Sales:
1. Microsoft Corporation (MSFT): $35.525
Shares of Microsoft were sold by 3 insiders:
- Founder Bill Gates sold 9,358,100 shares for $35.56, generating $332.79 million from the sale.
- EVP, Business Development/Evangelism Anthony John Bates sold 43,985 shares for $35.56, generating $1.56 million from the sale.
- Chief Accounting Officer Frank H. Brod sold 20,000 shares for $35.45, generating $709,026 from the sale.
You can view the list of recent insider transactions for Microsoft Corporation here.
|P/E: 13.3||Forward P/E: 12.17||Industry P/E: 34.69|
|P/S: 3.68||Price/Book: 3.62||EV/EBITDA: 7.44|
|Market Cap: $296.56B||Avg. Daily Volume: 49,997,300||52 Week Range: $26.26 – $36.43|
2. Apollo Group Inc. (APOL): $26.05
Shares of this for-profit education company were sold by 3 insiders:
- Chairman Emeritus, Apollo Group John G. Sperling sold 600,000 shares for $27.93, generating $16.76 million. These shares were sold indirectly through a trust.
- President-UOPX William John Pepicello sold 25,924 shares for $28.23, generating $731,886 from the sale.
- Chief Administrative Officer Jeffrey G. Langenbach sold 6,793 shares for $28.13, generating $191,120 from the sale.
- Director Darby E. Shupp sold 2,000 shares for $27.55, generating $55,091 from the sale.
This cluster sale by insiders of Apollo stood out because it occurred shortly after the company reported quarterly earnings of 55 cents, well above analyst estimates of 25 cents per share. The stock responded with a 28% gain jumping from $20.94 to $26.80.
The news buoyed the entire sector until competitor Strayer (STRA) reported earnings and saw its stock drop 20% in a single day. Both Apollo and Strayer reported double digit drops in enrollment. This cluster sale and Strayer’s results probably indicate that it might be too early to bottom fish in this hard hit sector.
You can view the list of recent insider transactions for Apollo Group Inc. here.
|P/E: 11.89||Forward P/E: 14.89||Industry P/E: 25.97|
|P/S: 0.82||Price/Book: 2.71||EV/EBITDA: 2.88|
|Market Cap: $2.95B||Avg. Daily Volume: 2,465,790||52 Week Range: $15.98 – $29.07|
3. Discover Financial Services (DFS): $52
Shares of this credit card company were sold by 4 insiders:
- Chairman and CEO David W. Nelms sold 75,000 shares for $51.01, generating $3.83 million from the sale.
- Executive Vice President Diane E. Offereins sold 50,000 shares for $51.59, generating $2.58 million from the sale.
- EVP,General Counsel & Secretary Kathryn McNamara Corley sold 31,459 shares for $51.98, generating $1.64 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
- EVP Harit Talwar sold 20,610 shares for $50.97, generating $1.05 million from the sale. These shares were sold indirectly through a trust.
You can view the list of recent insider transactions for Discover Financial Services here.
|P/E: 11.66||Forward P/E: 10.46||Industry P/E: N/A|
|P/S: 3.65||Price/Book: 2.34||EV/EBITDA: N/A|
|Market Cap: $24.91B||Avg. Daily Volume: 2,845,210||52 Week Range: $37.24 – $54.45|
4. Electronic Arts Inc. (EA): $25.63
Shares of this video games company were sold by 2 insiders:
- President of EA Labels Frank D. Gibeau sold 219,874 shares for $25.90, generating $5.69 million from the sale.
- Chief Operating Officer Peter R. Moore sold 50,000 shares for $26.49, generating $1.32 million from the sale.
You can view the list of recent insider transactions for Electronic Arts Inc. here.
|P/E: 68.16||Forward P/E: 17.32||Industry P/E: 13.96|
|P/S: 2.12||Price/Book: 3.22||EV/EBITDA: 18.68|
|Market Cap: $7.86B||Avg. Daily Volume: 4,111,000||52 Week Range: $12.72 – $28.13|
5. SYNNEX Corp. (SNX): $60.41
Director Matthew Miau sold 92,329 shares of this business services provider for $61.82, generating $5.71 million from the sale. These shares were sold indirectly by Silver Star Developments Limited.
You can view the list of recent insider transactions for SYNNEX Corp. here.
|P/E: 19.39||Forward P/E: 13.02||Industry P/E: 21.7|
|P/S: 0.22||Price/Book: 1.66||EV/EBITDA: 8.72|
|Market Cap: $2.24B||Avg. Daily Volume: 196,651||52 Week Range: $30.7 – $64.5|
You can view the full list of sales from this Insider Sales page.
Voluntary Disclosure: I have a long position in Freeport McMoRan Copper & Gold and a short position in Netflix.