March 1st, 2015
by Asif Suria
Insider buying tripled last week with insiders buying $168.17 million of stock compared to $56.56 million in the week prior. Selling on the other hand decreased with insiders selling $1.53 billion of stock last week compared to $1.59 billion 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 dropped down to 9.12. In other words, insiders sold more than 9 times as much stock as they purchased.The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 28.27.
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 February 27, 2015
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. Sprint Corporation (S): $5.12
President & CEO Raul Marcelo Claure acquired 5,080,000 shares of this telecommunications company, paying $4.92 per share for a total amount of $25 million. Mr. Claure increased his stake by 181.28% to 7,882,330 shares with this purchase.
This is an unusually large purchase by a non-founder CEO and I had to read through the footnotes of the filing carefully to see if it was a mistake. With nothing in the footnotes indicating that this was a mistake and no amended form 4 filed with the SEC, this looks like a legitimate purchase. Mr. Claure has served on the board of directors of Sprint since January 2014 and took over the role of CEO in August 2014.
SoftBank, which owns a majority stake in Sprint is also the majority stakeholder in Miami based wireless distributor Brightstar. Mr. Claure founded Brightstar in 1997 and is estimated to have a net worth north of $1 billion following SoftBank’s purchase of a 57% stake in Brightstar for $1.26 billion.
A balance sheet with more than $31 billion in debt, high cap-ex requirements and a highly competitive business make Sprint a challenging turnaround story. It will be interesting to see if Mr. Claure and SoftBank’s Masayoshi Son can pull off this turnaround.
In the words of Warren Buffett, who just released the 50th annual shareholder letter for Berkshire Hathaway:
“When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.”
You can view the list of recent insider transactions for Sprint Corporation here.
|P/E: N/A||Forward P/E: N/A||Industry P/E: 21.74|
|P/S: 0.54||Price/Book: 0.85||EV/EBITDA: 5.99|
|Market Cap: $20.26B||Avg. Daily Volume: 19,347,200||52 Week Range: $3.79 – $9.76|
2. CARBO Ceramics Inc. (CRR): $36.44
Director William C. Morris acquired 39,900 shares of this oilfield services technology company, paying $37.96 per share for a total amount of $1.51 million. These shares were purchased indirectly by Mr. Morris’s wife.
You can view the list of recent insider transactions for CARBO Ceramics Inc. here.
|P/E: 15.12||Forward P/E: 110.42||Industry P/E: 15.51|
|P/S: 1.28||Price/Book: 1.07||EV/EBITDA: 5.4|
|Market Cap: $849.02M||Avg. Daily Volume: 1,156,320||52 Week Range: $27.97 – $156|
3. Medgenics, Inc. (MDGN): $7.84
Director Sol J. Barer acquired 150,000 shares of this biotech company, paying $7.44 per share for a total amount of $1.12 million. Mr. Barer increased his stake by 72.46% to 357,000 shares with this purchase.
You can view the list of recent insider transactions for Medgenics, Inc. here.
|P/E: N/A||Forward P/E: N/A||Industry P/E: N/A|
|P/S: N/A||Price/Book: 6.75||EV/EBITDA: -8.61|
|Market Cap: $194.38M||Avg. Daily Volume: 141,848||52 Week Range: $3.68 – $8.79|
4. E. I. du Pont de Nemours and Company (DD): $77.85
Director Edward D. Breen acquired 13,000 shares of this agricultural chemicals company, paying $77.39 per share for a total amount of $1 million.
You can view the list of recent insider transactions for E. I. du Pont de Nemours and Company here.
|P/E: 19.88||Forward P/E: 16.92||Industry P/E: 19.56|
|P/S: 2.02||Price/Book: 5.4||EV/EBITDA: 11.79|
|Market Cap: $70.49B||Avg. Daily Volume: 3,746,640||52 Week Range: $63.7 – $78.18|
5. MRC Global Inc. (MRC): $12.87
Shares of this oil & gas equipment company were acquired by 2 insiders:
- Director H. B. Wehrle III acquired 50,000 shares, paying $12.75 per share for a total amount of $637,500.
- Director John Anthony Perkins acquired 15,000 shares, paying $12.63 per share for a total amount of $189,450. Mr. Perkins increased his stake by 45.88% to 47,691 shares with this purchase.
You can view the list of recent insider transactions for MRC Global Inc. here.
|P/E: 9.19||Forward P/E: 15.51||Industry P/E: 15.51|
|P/S: 0.22||Price/Book: 0.94||EV/EBITDA: 6.86|
|Market Cap: $1.31B||Avg. Daily Volume: 2,652,360||52 Week Range: $10.2 – $29.67|
You can view the full list of purchases from this Insider Buying page.
Notable Insider Sales:
1. Graham Holdings (GHC): $986.38
CEO and COB Donald Graham sold 44,623 shares of this education and media company for $990.11, generating $44.18 million from the sale. These shares were sold indirectly through trusts.
You can view the list of recent insider transactions for Graham Holdings here.
|P/E: N/A||Forward P/E: N/A||Industry P/E: N/A|
|P/S: N/A||Price/Book: N/A||EV/EBITDA: N/A|
|Market Cap: $N/A||Avg. Daily Volume: N/A||52 Week Range: $645.93 – $1023.99|
2. Rackspace Hosting, Inc. (RAX): $49.67
Shares of this server and cloud hosting company were sold by 4 insiders:
- Director Lew Moorman sold 447,700 shares for $49.68, generating $22.24 million from the sale. 134,000 of these shares were sold as a result of exercising options immediately prior to the sale and 47,700 of these shares were sold indirectly through a trust.
- Director Fred Reichheld sold 25,000 shares for $49.64, generating $1.24 million from the sale.
- Chief Operating Officer Mark Roenigk sold 17,000 shares for $49.48, generating $841,230 from the sale. 15,000 of these shares were sold as a result of exercising options immediately prior to the sale.
- Chief Accounting Officer Joseph Saporito sold 345 shares for $51.54, generating $17,781 from the sale.
You can view the list of recent insider transactions for Rackspace Hosting, Inc. here.
|P/E: 64.51||Forward P/E: 41.39||Industry P/E: 19.91|
|P/S: 3.9||Price/Book: 6.52||EV/EBITDA: 13.05|
|Market Cap: $7.04B||Avg. Daily Volume: 1,281,520||52 Week Range: $26.18 – $52.45|
3. Twitter, Inc. (TWTR): $48.08
Shares of Twitter were sold by 2 insiders:
- Director Evan Clark Williams sold 467,900 shares for $49.09, generating $22,.97 million from the sale. 467,900 of these shares were sold indirectly through various trusts.
- VP, Finance and Accounting Off Luca Baratta sold 10,000 shares for $48.90, generating $489,048 from the sale.
You can view the list of recent insider transactions for Twitter, Inc. here.
|P/E: N/A||Forward P/E: 59.36||Industry P/E: 37.8|
|P/S: 22.16||Price/Book: 8.57||EV/EBITDA: -85.4|
|Market Cap: $30.26B||Avg. Daily Volume: 20,474,700||52 Week Range: $29.51 – $56.09|
Voluntary Disclosure: I hold a long position in Twitter.
4. Lear Corp. (LEA): $108.92
Shares of this auto parts company were sold by 9 insiders:
- President & CEO Matthew Simoncini sold 70,323 shares for $108.32, generating $7.62 million from the sale.
- EVP, Business Dev & General Counsel Terrence B. Larkin sold 30,355 shares for $108.32, generating $3.29 million from the sale.
- EVP & President, Seating Raymond E. Scott sold 25,283 shares for $108.32, generating $2.74 million from the sale.
- Sr. VP and CFO Jeffrey H. Vanneste sold 20,451 shares for $108.32, generating $2.22 million from the sale.
- SVP Comm, Facilities & Investor Relations Mel Stephens sold 16,913 shares for $108.32, generating $1.83 million from the sale.
- Sr VP, Human Resources Thomas A. Didonato sold 16,177 shares for $108.32, generating $1.75 million from the sale.
- Sr. VP & President, EPMS Frank C. Orsini sold 11,995 shares for $108.32, generating $1.29 million from the sale.
- VP Treasurer & Chief Diversity Officer Shari L. Burgess sold 6,514 shares for $108.32, generating $705,573 from the sale.
- VP & Corporate Controller Wendy L. Foss sold 6,362 shares for $108.32, generating $689,109 from the sale.
You can view the list of recent insider transactions for Lear Corp. here.
|P/E: 13.23||Forward P/E: 10.02||Industry P/E: 18.96|
|P/S: 0.48||Price/Book: 2.88||EV/EBITDA: 6.77|
|Market Cap: $8.50B||Avg. Daily Volume: 670,898||52 Week Range: $75.05 – $111.77|
5. PPG Industries Inc. (PPG): $235.38
Shares of this specialty chemicals company were sold by 3 insiders:
- Chairman and CEO Charles E. Bunch sold 40,000 shares for $235.04, generating $9.4 million from the sale.
- Sr. VP & Gen. Counsel Glenn E. Bost II sold 19,897 shares for $233.78, generating $4.65 million from the sale. 14,527 of these shares were sold as a result of exercising options immediately prior to the sale.
- Executive Vice President Viktoras R. Sekmakas sold 19,378 shares for $236.35, generating $4.58 million from the sale. 12,664 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 PPG Industries Inc. here.
|P/E: 15.66||Forward P/E: 18.12||Industry P/E: 19.41|
|P/S: 2.09||Price/Book: 6.19||EV/EBITDA: 15.03|
|Market Cap: $32.02B||Avg. Daily Volume: 777,239||52 Week Range: $171.56 – $237.41|
You can view the full list of sales from this Insider Sales page.