posted on 15 November 2015
by Asif Suria
Insider buying increased significantly last week with insiders buying $193.44 million of stock compared to $39.44 million in the week prior. Selling also increased with insiders selling $2.88 billion of stock last week compared to $1.36 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 14.87. In other words, insiders sold almost 15 times as much stock as they purchased.The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 34.56.
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 13, 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:
Beyond the top 5 purchases mentioned below, there were several other interesting insider purchases that did not make the list. Some of these purchases include the Chairman of copper mining company Southern Copper (SCCO) picking up an additional $5.2 million worth of stock, acluster of purchases by three insiders of fertilizer company CF Industries (CF), a purchase by the CEO of medical equipment company MiMedx (MDXG), purchases by a cluster of 5 insiders of ethanol producer Pacific Ethanol (PEIX) and a purchase by the CEO of footwear company Crocs (CROX).
1. Restaurant Brands International Inc. (QSR): $35.55
Shares of this operator of Burger King and Tim Hortons were acquired by 2 insiders:
Mr. Sicupira is a partner at Brazilian private equity firm 3G Capital that teamed up with Warren Buffet to acquire Burger King and then merged the company with Tim Hortons. These two purchases follow a purchase by another director last week.
You can view the list of recent insider transactions for Restaurant Brands International Inc. here.
2. SolarCity Corporation (SCTY): $25.85
Chairman of the Board and 10% owner Elon Musk acquired 307,152 shares of this solar systems installer, paying $25.35 per share for a total amount of $7.79 million. These shares were purchased indirectly through a trust.
SolarCity has seen its stock drop nearly 45% in the last month, vindicating short-sellers like Jim Chanos (45% of the float was short as of October 30, 2015) who have claimed that the company is a subprime financing company. The entire sector has been in turmoil following lackluster results from companies like SunEdison (SUNE) that missed analyst expectations.
You can view the list of recent insider transactions for SolarCity Corporation here.
3. POZEN Inc. (POZN): $7.15
Chief Executive Officer Adrian Adams acquired 1,000,000 shares of this drug manufacturer, paying $6.55 per share for a total amount of $6.55 million. Mr. Adams increased his stake by 51.42% to 2,944,888 shares with this purchase.
You can view the list of recent insider transactions for POZEN Inc. here.
4. Kinder Morgan, Inc. (KMI): $23.35
Shares of this oil & gas pipelines company were acquired by 3 insiders:
You can view the list of recent insider transactions for Kinder Morgan, Inc. here.
5. NorthStar Realty Finance Corp. (NRF): $17.5
Shares of this commercial REIT were acquired by 2 insiders:
You can view the list of recent insider transactions for NorthStar Realty Finance Corp. here.
You can view the full list of purchases from this Insider Buying page.
Notable Insider Sales:
1. Valeant Pharmaceuticals International, Inc. (VRX): $75.41
Chief Executive Officer Michael J. Pearson sold 1,297,399 shares of this Canadian pharmaceutical company for $78.48, generating $101.83 million from the sale.
These shares were sold as a result of a margin call by Goldman Sachs to pay off personal loans made to Mr. Pearson. We wrote the following about the company three weeks ago following an insider purchase by a director of the company.
"This purchase occurred as two transactions on October 21st, the day when the stock went for a wild ride and dropped more than 40% from a high of $148.66 to $88.50 before it was halted. The decline in Valeant stock was triggered by allegations by well known short-selling firm Citron Research that Valeant was creating "phantom sales" through speciality pharmacies and engaging in channel stuffing. Citron's research note titled "Valeant: Could this be the Pharmaceutical Enron?" certainly spooked investors as any reference to fraud and Enron is likely to do.
Valeant's response categorically denied Citron's allegations and the stock bounced back when it resumed trading. There are a number of players on both sides of this trade and for further color you can check out this Canadian fund manager's interview on BNN as well as Citron's founder calling Valeant's response amateurish on Bloomberg. Investors are anxiously awaiting Valeant's conference call scheduled on Monday to address Citron's allegations in more detail.
The stock was already under pressure over the last few months declining from a high of $263.81 on August 6 to current levels as a result of a federal investigation into the company for raising the prices of two of its drugs by 525 and 212 percent. These price increases came under increased scrutiny following the backlash suffered by Turing Pharmaceuticals when it shocked the nation by raising the price of a 62 year old drug by 5,000%."
You can view the list of recent insider transactions for Valeant Pharmaceuticals International, Inc. here.
2. Facebook, Inc. (FB): $103.95
Director Marc L. Andreessen sold 890,491 shares of Facebook for $107.94, generating $96.12 million from the sale. These shares were sold indirectly through a trust.
You can view the list of recent insider transactions for Facebook, Inc. here.
3. The Ultimate Software Group, Inc. (ULTI): $199.83
Shares of this software-as-a-service (SAAS) provider were sold by 6 insiders:
You can view the list of recent insider transactions for The Ultimate Software Group, Inc. here.
4. First Solar, Inc. (FSLR): $52.72
Shares of this solar energy company were sold by 9 insiders:
You can view the list of recent insider transactions for First Solar, Inc. here.
5. The Greenbrier Companies, Inc. (GBX): $31.95
Shares of this Oregon based railroad freight car equipment company were sold by 2 insiders:
You can view the list of recent insider transactions for The Greenbrier Companies, Inc. here.
You can view the full list of sales from this Insider Sales page.
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