September 28th, 2014
by Asif Suria
Insider buying decreased last week with insiders buying $30.92 million of stock compared to $49.49 million in the week prior. Selling increased with insiders selling $587.59 million of stock last week compared to $469.15 million in the week prior.
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 19. In other words, insiders sold 19 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 9.48.
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 September 26, 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. American Eagle Outfitters, Inc. (AEO): $14.67
Executive Chairman & Interim CEO Jay L. Schottenstein acquired 500,000 shares of this apparel chain, paying $14.48 per share for a total amount of $7.24 million. These shares were purchased indirectly by SEI, Inc.
The last 5 years have been difficult for teen and young adult retailers like American Eagle Outfitters (AEO), Aeropostale (ARO), Abercrombie & Fitch (ANF) and Urban Outfitters (URBN). The stocks of these companies have been blissfully unaware of the raging bull market we have experienced and companies like American Eagle Outfitters and Aeropostale have seen their stocks drop 8.7% and 88% respectively over the last 5 years. Aeropostale turned out to be the classic definition of a value trap where the stock looked incredibly cheap while looking in the rear view mirror even as the business fundamentals continued to deteriorate.
This is the second large purchase by Mr. Schottenstein this year and follows his $6.42 million purchase at an average price of $12.84/share in January. Two other directors also picked up shares but their purchases were much smaller.
With same store sales (SSS) declining 8% in its flagship brand and a 2.3% drop in revenue last quarter despite heavy promotions, it does not look like American Eagle Outfitters is out of the woods yet. On the positive side, the company has $263 million in net cash on its balance sheet, their intimates brand Aerie is doing well with 9% SSS growth and international sales are growing. Free cash flow has been negative on account of high CapEx this year but the company expects CapEx to drop to $150 million in 2015 from the $230 million they expect to spend this year.
You can view the list of recent insider transactions for American Eagle Outfitters, Inc. here.
|P/E: 62.96||Forward P/E: 19.05||Industry P/E: 19.09|
|P/S: 0.86||Price/Book: 2.47||EV/EBITDA: 8.53|
|Market Cap: $2.85B||Avg. Daily Volume: 5,498,830||52 Week Range: $10.12 – $16.95|
2. Continental Resources, Inc. (CLR): $68.32
CEO & Chairman Harold Hamm acquired 71,999 shares of this independent oil & gas company, paying $67.45 per share for a total amount of $4.86 million. Mr. Hamm increased his stake by 0.03% to 252,956,381 shares with this purchase.
You can view the list of recent insider transactions for Continental Resources, Inc. here.
|P/E: 40.19||Forward P/E: 17.08||Industry P/E: 22.81|
|P/S: 5.97||Price/Book: 5.73||EV/EBITDA: 11.62|
|Market Cap: $25.20B||Avg. Daily Volume: 1,932,530||52 Week Range: $50.12 – $80.91|
3. Restoration Hardware Holdings, Inc. (RH): $80.31
Chairman & CEO Gary G. Friedman acquired 25,974 shares of this home furnishing company, paying $76.82 per share for a total amount of $1.99 million. Mr. Friedman increased his stake by 1.13% to 2,334,533 shares with this purchase.
You can view the list of recent insider transactions for Restoration Hardware Holdings, Inc. here.
|P/E: 51.28||Forward P/E: 27.22||Industry P/E: 20.5|
|P/S: 1.9||Price/Book: 5.16||EV/EBITDA: 16.42|
|Market Cap: $3.17B||Avg. Daily Volume: 1,112,230||52 Week Range: $54.61 – $94.5|
4. La Jolla Pharmaceutical Co. (LJPC): $9.25
Shares of this biotech company were acquired by 2 insiders:
- Director Kevin C. Tang acquired 169,555 shares, paying $9.14 per share for a total amount of $1.55 million. These shares were purchased indirectly by Tang Capital Partners, LP.
- President, CEO & Secretary George F. Tidmarsh acquired 5,000 shares, paying $9.18 per share for a total amount of $45,900. Mr. Tidmarsh increased his stake by 0.35% to 1,415,086 shares with this purchase.
The 52 week range numbers provided by Yahoo look suspect and are probably incorrect on account of a 1 for 50 reverse stock split.
You can view the list of recent insider transactions for La Jolla Pharmaceutical Co. here.
|P/E: N/A||Forward P/E: N/A||Industry P/E: 29.41|
|P/S: N/A||Price/Book: N/A||EV/EBITDA: -6.86|
|Market Cap: $140.91M||Avg. Daily Volume: 556,111||52 Week Range: $0.16 – $19.5|
5. Opko Health, Inc. (OPK): $8.6
CEO & Chairman Phillip Frost M.D. acquired 115,100 shares of this medical devices and drug development company, paying $8.36 per share for a total amount of $962,694.
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: 26.79|
|P/S: 42.01||Price/Book: 3.96||EV/EBITDA: -42.65|
|Market Cap: $3.69B||Avg. Daily Volume: 2,330,310||52 Week Range: $7.32 – $12.95|
You can view the full list of purchases from this Insider Buying page.
Notable Insider Sales:
1. Facebook, Inc. (FB): $78.79
Shares of Facebook were sold by 2 insiders:
- Chief Operating Officer Sheryl Sandberg sold 283,334 shares for $78.17, generating $22.15 million from the sale.
- Chief Technology Officer Michael Todd Schroepfer sold 35,000 shares for $77.00, generating $2.69 million from the sale.
You can view the list of recent insider transactions for Facebook, Inc. here.
|P/E: 83.73||Forward P/E: 38.81||Industry P/E: 34|
|P/S: 20.05||Price/Book: 10.8||EV/EBITDA: 35.25|
|Market Cap: $204.86B||Avg. Daily Volume: 36,622,900||52 Week Range: $43.55 – $78.94|
2. Alexion Pharmaceuticals, Inc. (ALXN): $167.65
Shares of this biotech company were sold by 2 insiders:
- CEO Leonard Bell sold 60,000 shares for $165.12, generating $9.91 million from the sale.
- EVP, Chief Global Operations Officer Stephen P. Squinto sold 76 shares for $159.50, generating $12,122 from the sale.
You can view the list of recent insider transactions for Alexion Pharmaceuticals, Inc. here.
|P/E: 84.04||Forward P/E: 29.16||Industry P/E: 29.41|
|P/S: 17.08||Price/Book: 11.39||EV/EBITDA: 40.69|
|Market Cap: $33.16B||Avg. Daily Volume: 1,164,340||52 Week Range: $100.89 – $185.43|
3. Carnival Corporation (CCL): $40.87
Chairman of the Board Micky Meir Arison sold 212,474 shares of this cruise ship operator for $40.22, generating $8.55 million from the sale. These shares were sold indirectly by various trusts and entities.
You can view the list of recent insider transactions for Carnival Corporation here.
|P/E: 22.58||Forward P/E: 17.93||Industry P/E: 24.67|
|P/S: 1.99||Price/Book: 1.25||EV/EBITDA: 11.56|
|Market Cap: $31.76B||Avg. Daily Volume: 3,491,730||52 Week Range: $31.44 – $42.31|
4. Jazz Pharmaceuticals Public Limited Company (JAZZ): $160.53
Director Seamus Mulligan sold 50,000 shares of this biotech company for $163.16, generating $8.16 million from the sale.
You can view the list of recent insider transactions for Jazz Pharmaceuticals Public Limited Company here.
|P/E: 118.65||Forward P/E: 15.91||Industry P/E: 29.41|
|P/S: 9.57||Price/Book: 7.53||EV/EBITDA: 20.57|
|Market Cap: $9.67B||Avg. Daily Volume: 965,859||52 Week Range: $80.4 – $176.6|
5. Salesforce.com, Inc (CRM): $56.56
Chairman of the Board & CEO Marc Benioff sold 100,000 shares of this Software as a Service (SaaS) provider for $56.89, generating $5.69 million from the sale.
You can view the list of recent insider transactions for Salesforce.com, Inc here.
|P/E: N/A||Forward P/E: 79.66||Industry P/E: 37.26|
|P/S: 7.26||Price/Book: 10.49||EV/EBITDA: 11.73|
|Market Cap: $35.01B||Avg. Daily Volume: 4,705,350||52 Week Range: $48.18 – $67|
You can view the full list of sales from this Insider Sales page.
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