June 1st, 2014
by Asif Suria
Insider buying declined for a second week with insiders buying $26.37 million of stock compared to $73.08 million in the week prior. Selling on the other hand doubled with insiders selling $3.04 billion of stock last week compared to $1.51 billion in the week prior. A large part of the selling was related to selling by shareholders of HCA Holdings (HCA) through a secondary offering and by selling their shares to the company.
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 115.19. In other words, insiders sold more than 115 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 20.69.
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 30, 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. Dick’s Sporting Goods Inc. (DKS): $44.45
Shares of this sporting goods retailer were acquired by 3 insiders:
- Chairman and Chief Executive Officer Edward W. Stack acquired 115,000 shares, paying $42.56 per share for a total amount of $4.89 million. Mr. Stack increased his stake by 1.03% to 11,324,088 shares with this purchase.
- Director Larry D. Stone acquired 23,000 shares, paying $42.46 per share for a total amount of $976,684. These shares were acquired indirectly through a trust.
- EVP-Finance, Admin & CFO Andre J. Hawaux acquired 2,300 shares, paying $42.82 per share for a total amount of $98,486. Mr. Hawaux increased his stake by 4.08% to 58,653 shares with this purchase.
The timing of this purchase was interesting as it follows a drop in the stock after the company reported disappointing first quarter earnings and lowered its full year forecast. The stock was trading at a two year low at the time of these insider purchases. In contrast, competitor Cabela’s (CAB) is up more than 73% over the last two years as you can see from this chart.
While earnings did not meet expectations, the company saw both its top line and bottom line increase nearly 8%. Same store sales also increased 1.5%. Despite continued weakness in its golfing and hunting divisions, it plans to open 50 new Dick’s stores this year and has also seen higher E-commerce sales. Trading at 7 times EBITDA, the stock is trading at an attractive valuation.
The company saw the cash on its balance sheet increase to $139 million and carries no debt. In addition to this cluster of insider purchases, the company also plans on buying back $1 billion on its stock this year and has already purchased $280.6 million worth of stock this year.
Voluntary Disclosure: I picked up a position in Dick’s Sporting Goods following these insider purchases.
You can view the list of recent insider transactions for Dick’s Sporting Goods Inc. here.
|P/E: 16.21||Forward P/E: 13.89||Industry P/E: 17.93|
|P/S: 0.83||Price/Book: 3.01||EV/EBITDA: 7.08|
|Market Cap: $5.38B||Avg. Daily Volume: 1,888,710||52 Week Range: $42.33 – $58.87|
2. The GEO Group, Inc. (GEO): $34.01
Chairman & CEO George C. Zoley acquired 100,000 shares of this correctional and detention facilities REIT, paying $33.69 per share for a total amount of $3.37 million. Mr. Zoley increased his stake by 12.32% to 911,600 shares with this purchase.
You can view the list of recent insider transactions for The GEO Group, Inc. here.
|P/E: 20.39||Forward P/E: 17.62||Industry P/E: 34.74|
|P/S: 1.6||Price/Book: 2.41||EV/EBITDA: 13.8|
|Market Cap: $2.44B||Avg. Daily Volume: 561,417||52 Week Range: $30.11 – $36.63|
3. TrueCar, Inc. (TRUE): $10.96
Shares of this online car shopping company were acquired by 3 insiders:
- CEO & Chairman of the Board Scott Painter acquired 100,000 shares, paying $10.33 per share for a total amount of $1.03 million. Mr. Painter increased his stake by 6.01% to 1,764,176 shares with this purchase.
- Chief Product Officer Thomas Taira acquired 8,000 shares, paying $9.76 per share for a total amount of $78,100. Mr. Taira increased his stake by 2.92% to 281,904 shares with this purchase.
- EVP, Corporate and Partner Development James Nguyen acquired 2,750 shares, paying $9.65 per share for a total amount of $26,533. 2,000 of these shares were purchased indirectly by Mr. Nguyen’s spouse.
Following the purchase by the CEO shortly after the IPO last week as highlighted in the last edition, there were additional purchases this week and the stock continued trending higher. It is now up 18.87% since Mr. Painter’s purchase.
You can view the list of recent insider transactions for TrueCar, Inc. here.
|P/E: N/A||Forward P/E: N/A||Industry P/E: 3.01|
|P/S: 4.91||Price/Book: 4.77||EV/EBITDA: -32.8|
|Market Cap: $778.58M||Avg. Daily Volume: 1,062,060||52 Week Range: $9.05 – $11.5|
4. Bank of the Ozarks, Inc. (OZRK): $59.04
Director Richard L. Cisne acquired 10,025 shares of this regional bank, paying $58.34 per share for a total amount of $584,822. Mr. Cisne increased his stake by 37.34% to 36,875 shares with this purchase. 450 of these shares were purchased indirectly by Mr. Cisne’s spouse.
You can view the list of recent insider transactions for Bank of the Ozarks, Inc. here.
|P/E: 23.34||Forward P/E: 18||Industry P/E: 16.02|
|P/S: 8.4||Price/Book: 3.36||EV/EBITDA: N/A|
|Market Cap: $2.18B||Avg. Daily Volume: 224,327||52 Week Range: $42.36 – $70.49|
5. Frank’s International N.V. (FI): $23.84
Chairman of Supervisory Board, Director, Chief Executive Officer and President D. Keith Mosing acquired 16,254 shares of this provider of engineered tubular services to the energy industry, paying $23.00 per share for a total amount of $373,767. Mr. Mosing increased his stake by 13.17% to 139,702 shares with this purchase. 9,402 of these shares were purchased by Mr. Mosing’s child.
You can view the list of recent insider transactions for Frank’s International N.V. here.
|P/E: 13.81||Forward P/E: 16.44||Industry P/E: 35.87|
|P/S: 3.3||Price/Book: 3.23||EV/EBITDA: 7.45|
|Market Cap: $3.66B||Avg. Daily Volume: 331,928||52 Week Range: $20.76 – $32.7|
You can view the full list of purchases from this Insider Buying page.
Notable Insider Sales:
1. Plains All American Pipeline, L.P. (PAA): $56.47
President of subsidiary-PMC ULC David Duckett sold 208,182 shares of this oil & gas pipelines company for $55.79, generating $11.61 million from the sale. These shares were sold indirectly through a corporation.
You can view the list of recent insider transactions for Plains All American Pipeline, L.P. here.
|P/E: 24.82||Forward P/E: 20.24||Industry P/E: 35.87|
|P/S: 0.47||Price/Book: 2.74||EV/EBITDA: 14.36|
|Market Cap: $20.55B||Avg. Daily Volume: 823,856||52 Week Range: $47.26 – $58.69|
2. Ross Stores Inc. (ROST): $68.45
Vice Chairman and CEO Michael Balmuth sold 134,376 shares of this discount apparel chain for $68.10, generating $9.15 million from the sale.
You can view the list of recent insider transactions for Ross Stores Inc. here.
|P/E: 17.3||Forward P/E: 14.59||Industry P/E: 18.5|
|P/S: 1.37||Price/Book: 6.82||EV/EBITDA: 8.88|
|Market Cap: $14.30B||Avg. Daily Volume: 1,734,780||52 Week Range: $62.65 – $81.99|
3. Carpenter Technology Corp. (CRS): $62.49
Director Thomas O. Hicks sold 142,184 shares of this metal fabrication company for $63.51, generating $9.03 million from the sale. These shares were sold indirectly by various entities.
You can view the list of recent insider transactions for Carpenter Technology Corp. here.
|P/E: 24.74||Forward P/E: 17.46||Industry P/E: N/A|
|P/S: 1.53||Price/Book: 2.34||EV/EBITDA: 12.07|
|Market Cap: $3.32B||Avg. Daily Volume: 285,533||52 Week Range: $43.91 – $67|
4. Illinois Tool Works Inc. (ITW): $86.55
Director Robert C. McCormack sold 98,300 shares of this diversified machinery company for $86.71, generating $8.52 million from the sale. These shares were sold indirectly through various trusts.
You can view the list of recent insider transactions for Illinois Tool Works Inc. here.
|P/E: 21.23||Forward P/E: 16.49||Industry P/E: 21.06|
|P/S: 2.51||Price/Book: 4.17||EV/EBITDA: 12.95|
|Market Cap: $35.71B||Avg. Daily Volume: 1,995,570||52 Week Range: $67.14 – $88|
5. General American Investors Company, Inc. (GAM): $35.74
Director Arthur G. Altschul Jr. sold 88,050 shares of this closed-end fund for $35.32, generating $3.11 million from the sale. These shares were sold indirectly through trusts.
You can view the list of recent insider transactions for General American Investors Company, Inc. here.
|P/E: 5.15||Forward P/E: N/A||Industry P/E: N/A|
|P/S: 51.67||Price/Book: 0.86||EV/EBITDA: N/A|
|Market Cap: $1.06B||Avg. Daily Volume: 38,703||52 Week Range: $30.28 – $36.04|
You can view the full list of sales from this Insider Sales page.
Connect with me on LinkedIn: http://www.linkedin.com/in/asifsuria