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posted on 15 November 2015

Insider Trading 13 November 2015: Valeant Pharmaceuticals, Facebook Selling

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

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:

  • Director Carlos Alberto Sicupira acquired 196,000 shares, paying $35.56 per share for a total amount of $6.97 million. These shares were acquired indirectly through Lobstertail Corporation.

  • Director Paul J. Fribourg acquired 112,700 shares, paying $35.47 per share for a total amount of $3.99 million. Mr. Fribourg increased his stake by 243.18% to 159,045 shares with this purchase.

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.

P/E: N/AForward P/E: 27.35Industry P/E: N/A
P/S: 2.1Price/Book: 4.92EV/EBITDA: 14.15
Market Cap: $7.20BAvg. Daily Volume: 1,039,65052 Week Range: $34.19 - $45.71

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.

P/E: N/AForward P/E: N/AIndustry P/E: 21.82
P/S: 6.87Price/Book: 3EV/EBITDA: -10.87
Market Cap: $2.52BAvg. Daily Volume: 3,503,86052 Week Range: $24.07 - $63.79

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.

P/E: N/AForward P/E: 238.33Industry P/E: 28.4
P/S: 8.56Price/Book: 7.46EV/EBITDA: -210.55
Market Cap: $234.36MAvg. Daily Volume: 546,55152 Week Range: $5.49 - $12.69

4. Kinder Morgan, Inc. (KMI): $23.35

Shares of this oil & gas pipelines company were acquired by 3 insiders:

  • Director Michael C. Morgan acquired 126,300 shares, paying $24.64 per share for a total amount of $3.11 million. These shares were acquired indirectly through a fund.

  • Executive Chairman Richard D. Kinder acquired 100,000 shares, paying $24.69 per share for a total amount of $2.47 million. Mr. Kinder increased his stake by 0.04% to 234,212,353 shares with this purchase.

  • V.P.(Pres. Nat. Gas Pipelines) Thomas A. Martin acquired 10,000 shares, paying $24.48 per share for a total amount of $244,800. Mr. Martin increased his stake by 1.02% to 995,069 shares with this purchase.

You can view the list of recent insider transactions for Kinder Morgan, Inc. here.

P/E: 44.31Forward P/E: 28.13Industry P/E: 25.23
P/S: 3.56Price/Book: 1.47EV/EBITDA: 15
Market Cap: $52.11BAvg. Daily Volume: 17,780,10052 Week Range: $22.57 - $44.71

5. NorthStar Realty Finance Corp. (NRF): $17.5

Shares of this commercial REIT were acquired by 2 insiders:

  • Executive Chairman of NSAM David T. Hamamoto acquired 137,700 shares, paying $19.11 per share for a total amount of $2.63 million. Mr. Hamamoto increased his stake by 72.26% to 328,272 shares with this purchase.

  • CEO and President of NSAM Albert Tylis acquired 50,000 shares, paying $19.05 per share for a total amount of $952,500.

You can view the list of recent insider transactions for NorthStar Realty Finance Corp. here.

P/E: N/AForward P/E: N/AIndustry P/E: 19.74
P/S: N/APrice/Book: N/AEV/EBITDA: N/A
Market Cap: $N/AAvg. Daily Volume: N/A52 Week Range: $16.5 - $39.48

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.

P/E: 43.31Forward P/E: N/AIndustry P/E: N/A
P/S: 2.54Price/Book: 3.99EV/EBITDA: 11.13
Market Cap: $25.73BAvg. Daily Volume: 11,354,30052 Week Range: $72.09 - $263.81

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.

P/E: 104.37Forward P/E: 36.35Industry P/E: 35.56
P/S: 19.17Price/Book: 7.34EV/EBITDA: 43.54
Market Cap: $293.97BAvg. Daily Volume: 30,716,90052 Week Range: $72 - $110.65

3. The Ultimate Software Group, Inc. (ULTI): $199.83

Shares of this software-as-a-service (SAAS) provider were sold by 6 insiders:

  • Chairman, President and CEO Scott Scherr sold 44,183 shares for $204.18, generating $9.02 million from the sale.

  • Vice-Chairman & COO Marc D. Scherr sold 30,644 shares for $204.45, generating $6.27 million from the sale.

  • Exec. VP, CFO and Treasurer Mitchell K. Dauerman sold 16,127 shares for $204.27, generating $3.29 million from the sale.

  • Senior VP, Technology Adam Rogers sold 10,326 shares for $204.18, generating $2.11 million from the sale.

  • Senior VP, Enterprise Sales Gregory Swick sold 8,469 shares for $204.16, generating $1.73 million from the sale.

  • Director Leroy Vander Putten sold 1,136 shares for $205.76, generating $233,745 from the sale.

You can view the list of recent insider transactions for The Ultimate Software Group, Inc. here.

P/E: 232.63Forward P/E: 63.44Industry P/E: 39.38
P/S: 10.06Price/Book: 17.76EV/EBITDA: 87.52
Market Cap: $5.73BAvg. Daily Volume: 255,85152 Week Range: $138.64 - $216.27

4. First Solar, Inc. (FSLR): $52.72

Shares of this solar energy company were sold by 9 insiders:

  • Chief Executive Officer James Alton Hughes sold 95,899 shares for $55.43, generating $5.32 million from the sale.

  • Chief Financial Officer Mark R. Widmar sold 88,333 shares for $55.07, generating $4.86 million from the sale.

  • President, US Georges Antoun sold 88,333 shares for $55.29, generating $4.88 million from the sale.

  • Chief Operating Officer Philip Dejong sold 45,000 shares for $55.06, generating $2.48 million from the sale.

  • Chief Technology Officer Raffi Garabedian sold 45,000 shares for $55.13, generating $2.48 million from the sale.

  • President, International Joseph Kishkill sold 21,208 shares for $55.44, generating $1.18 million from the sale.

  • SVP, Human Resources Christopher Bueter sold 16,667 shares for $55.02, generating $917,068 from the sale.

  • SVP, Corp Dev & Strategic Marketing Timothy Brian Rebhorn sold 16,525 shares for $55.59, generating $918,554 from the sale.

  • EVP, General Counsel Paul J. Kaleta sold 8,461 shares for $55.59, generating $470,323 from the sale.

You can view the list of recent insider transactions for First Solar, Inc. here.

P/E: 9.3Forward P/E: 13.48Industry P/E: 21.82
P/S: 1.49Price/Book: 1.01EV/EBITDA: 4.68
Market Cap: $5.32BAvg. Daily Volume: 1,921,35052 Week Range: $39.18 - $65.5

5. The Greenbrier Companies, Inc. (GBX): $31.95

Shares of this Oregon based railroad freight car equipment company were sold by 2 insiders:

  • President & CEO William A. Furman sold 433,917 shares for $36.50, generating $15.84 million from the sale.

  • SVP & CCO William Glenn sold 19,000 shares for $36.10, generating $685,957 from the sale.

You can view the list of recent insider transactions for The Greenbrier Companies, Inc. here.

P/E: 5.39Forward P/E: 6.78Industry P/E: 19.79
P/S: 0.35Price/Book: 1.26EV/EBITDA: 2.55
Market Cap: $909.44MAvg. Daily Volume: 683,50652 Week Range: $30.35 - $67.45

You can view the full list of sales from this Insider Sales page.

Connect with me on LinkedIn: http://www.linkedin.com/in/asifsuria or follow me on Twitter @asifsuria

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