May 5th, 2014
by Asif Suria
Insider buying declined sharply last week with insiders purchasing $16.74 million of their stock compared to $48.69 million in the week prior. Selling on the other hand more than doubled with insiders selling $1.38 billion of stock last week compared to $502.48 million in the week prior. Despite the drop in insider buying there were some interesting purchases this 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 102.36. In other words, insiders sold more than 102 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 10.32.
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 May 2, 2014
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. Sonus Networks, Inc. (SONS): $3.18
Shares of this networking equipment manufacturer were acquired by 2 insiders:
- CEO and President Raymond P. Dolan acquired 1,000,000 shares, paying $2.98 per share for a total amount of $2.98 million. Mr. Dolan increased his stake by 48.11% to 3,078,674 shares with this purchase.
- CFO Mark T. Greenquist acquired 15,000 shares, paying $2.95 per share for a total amount of $44,247. Mr. Greenquist increased his stake by 6.00% to 265,000 shares with this purchase.
This purchase caught my attention for several reasons beyond the size of the CEO’s purchase. The company is in the midst of a turnaround and saw 12% revenue growth last quarter, an increase in gross margin and positive operating margins. The company is targeting an increase in operating margin to 10% in 2015 on double digit revenue growth.
The company has purchased 40 million shares representing 14% of outstanding shares since launching a buyback program last July. This includes the purchase of 21.5 million shares for $75 million from their largest investor through a recent secondary offering. The company still has $40 million left in its current buyback plan. The company has a strong balance sheet with over $208 million in net cash and investments, a quick ratio of 2.8 and a current ratio of 3.06.
Voluntary Disclosure: I will be acquiring shares of Sonus Networks for my personal portfolio over the next few days.
You can view the list of recent insider transactions for Sonus Networks, Inc. here.
|P/E: N/A||Forward P/E: 26.5||Industry P/E: N/A|
|P/S: 2.83||Price/Book: 3.27||EV/EBITDA: 78.18|
|Market Cap: $787.68M||Avg. Daily Volume: 2,734,820||52 Week Range: $2.34 – $3.98|
2. Aaron’s, Inc. (AAN): $30.39
EVP of Aaron’s and President/CEO of Progressive, John W. Robinson acquired 50,000 shares of this consumer lease-to-own retailer, paying $28.96 per share for a total amount of $1.45 million. Mr. Robinson increased his stake by 173.33% to 78,846 shares with this purchase.
You can view the list of recent insider transactions for Aaron’s, Inc. here.
|P/E: 19.23||Forward P/E: 11.73||Industry P/E: N/A|
|P/S: 0.95||Price/Book: 1.89||EV/EBITDA: 7.98|
|Market Cap: $2.19B||Avg. Daily Volume: 1,436,430||52 Week Range: $26.18 – $32.64|
3. Omnicare Inc. (OCR): $60.15
President & COO Nitin Sahney acquired 20,000 shares of this pharmaceutical and medical supplies provider, paying $58.49 per share for a total amount of $1.17 million. Mr. Sahney increased his stake by 22.35% to 109,495 shares with this purchase.
You can view the list of recent insider transactions for Omnicare Inc. here.
|P/E: N/A||Forward P/E: 14.64||Industry P/E: N/A|
|P/S: 1||Price/Book: 2.21||EV/EBITDA: 10.98|
|Market Cap: $6.00B||Avg. Daily Volume: 1,380,930||52 Week Range: $44.27 – $64.87|
4. GrafTech International Ltd. (GTI): $10.9
Shares of this graphite materials company were acquired by 4 insiders:
- Director Randy W. Carson acquired 23,480 shares, paying $11.48 per share for a total amount of $269,486. Mr. Carson increased his stake by 47.05% to 73,388 shares with this purchase.
- Director Mary B. Cranston acquired 22,100 shares, paying $11.37 per share for a total amount of $251,277. Ms. Cranston increased her stake by 40.23% to 77,040 shares with this purchase.
- Director Steven R. Shawley acquired 22,023 shares, paying $11.35 per share for a total amount of $249,961. Mr. Shawley increased his stake by 43.33% to 72,850 shares with this purchase.
- Director Ferrell P. McClean acquired 21,800 shares, paying $11.39 per share for a total amount of $248,302. Mr. Mcclean increased his stake by 28.61% to 97,984 shares with this purchase.
You can view the list of recent insider transactions for GrafTech International Ltd. here.
|P/E: N/A||Forward P/E: 22.24||Industry P/E: N/A|
|P/S: 1.27||Price/Book: 1.13||EV/EBITDA: 13.04|
|Market Cap: $1.48B||Avg. Daily Volume: 1,511,730||52 Week Range: $6.84 – $13.01|
5. United Continental Holdings, Inc. (UAL): $40.72
Chairman, President & CEO Jeffery A. Smisek acquired 20,000 shares of this airline, paying $39.62 per share for a total amount of $792,380. Mr. Smisek increased his stake by 4.27% to 487,838 shares with this purchase.
You can view the list of recent insider transactions for United Continental Holdings, Inc. here.
|P/E: 40.36||Forward P/E: 7.34||Industry P/E: N/A|
|P/S: 0.4||Price/Book: 5.93||EV/EBITDA: 6.86|
|Market Cap: $15.21B||Avg. Daily Volume: 5,071,800||52 Week Range: $27.32 – $49.2|
You can view the full list of purchases from this Insider Buying page.
Notable Insider Sales:
1. Microsoft Corporation (MSFT): $39.69
Shares of Microsoft were sold by 2 insiders:
- Founder Bill Gates sold 7,850,000 shares for $40.44, generating $317.48 million from the sale.
- Chief Accounting Officer Frank H. Brod sold 6,000 shares for $40.12, generating $240,720 from the sale.
You can view the list of recent insider transactions for Microsoft Corporation here.
|P/E: 14.87||Forward P/E: 13.78||Industry P/E: N/A|
|P/S: 3.96||Price/Book: 3.78||EV/EBITDA: 8.58|
|Market Cap: $327.86B||Avg. Daily Volume: 36,540,400||52 Week Range: $30.84 – $41.66|
2. The Charles Schwab Corporation (SCHW): $26.7
Chairman Charles R. Schwab sold 1,500,000 shares of this investment brokerage for $26.53, generating $39.79 million from the sale. 1,000,000 of these shares were sold indirectly through a trust.
You can view the list of recent insider transactions for The Charles Schwab Corporation here.
|P/E: 30.55||Forward P/E: 22.63||Industry P/E: 12.46|
|P/S: 6.14||Price/Book: 3.62||EV/EBITDA: N/A|
|Market Cap: $34.67B||Avg. Daily Volume: 8,444,660||52 Week Range: $16.63 – $29.13|
3. Huntsman Corporation (HUN): $25.38
Shares of this chemicals producer were sold by 2 insiders:
- Executive Chairman Jon M. Huntsman sold 500,000 shares for $25.11, generating $12.56 million from the sale. These shares were sold indirectly by the Huntsman Family Holdings Company LLC.
- Division President James H. Huntsman sold 59,129 shares for $24.84, generating $1.47 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 Huntsman Corporation here.
|P/E: 47.98||Forward P/E: 9.65||Industry P/E: N/A|
|P/S: 0.55||Price/Book: 3.05||EV/EBITDA: 8.68|
|Market Cap: $6.14B||Avg. Daily Volume: 3,747,870||52 Week Range: $16.02 – $26.35|
4. Anixter International Inc. (AXE): $97.83
Director Robert W. Grubbs sold 134,897 shares of this industrial equipment wholesaler for $97.96, generating $13.21 million from the sale. 54,897 of 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 Anixter International Inc. here.
|P/E: 16.19||Forward P/E: 13.66||Industry P/E: N/A|
|P/S: 0.51||Price/Book: 3.13||EV/EBITDA: 10.34|
|Market Cap: $3.18B||Avg. Daily Volume: 357,532||52 Week Range: $70.33 – $115.84|
5. Everest Re Group Ltd. (RE): $159.31
Shares of this insurance company were sold by 4 insiders:
- Director Joseph V. Taranto sold 69,310 shares for $157.25, generating $10.89 million from the sale. 33,500 of these shares were sold indirectly through a trust.
- Director John A. Weber sold 6,000 shares for $158.20, generating $949,200 from the sale.
- Executive Vice President Mark S. de Saram sold 1,683 shares for $158.68, generating $267,062 from the sale.
- Director John R. Dunne sold 500 shares for $156.91, generating $78,456 from the sale.
You can view the list of recent insider transactions for Everest Re Group Ltd. here.
|P/E: 6.26||Forward P/E: 8.33||Industry P/E: 17.94|
|P/S: 1.34||Price/Book: 1.09||EV/EBITDA: N/A|
|Market Cap: $7.55B||Avg. Daily Volume: 425,300||52 Week Range: $122.89 – $161.52|
You can view the full list of sales from this Insider Sales page.
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