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posted on 23 November 2015

Insider Trading 20 November 2015: Southern Copper Buying, Hawaiian Holdings Selling

by Asif Suria

Insider buying decreased last week with insiders buying $132.46 million of stock compared to $193.44 million in the week prior. Selling also decreased with insiders selling $2.15 billion of stock last week compared to $2.88 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 went up to 16.24. In other words, insiders sold more than 16 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 14.87.

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 20, 2015

Insider Sell Buy Ratio November 20, 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. Southern Copper Corp. (SCCO): $27.34

Chairman of the Board German Larrea Velasco acquired 271,000 shares of this copper mining company, paying $26.36 per share for a total amount of $7.14 million. Mr. Velasco increased his stake by 11.96% to 2,536,567 shares with this purchase.

This is the fourth time in the last three months we have reported on large insider purchases by Mr. Mota-Velasco. We wrote the following about the company last month after one of his purchases,

"With copper prices close to a six year low, Mr. Mota-Velasco has purchased large quantities of Southern Copper stock over the last year. This Mexican mining mogul has obviously been early in expecting an end to this commodities bear market. Considering he has been the Chairman of the company since 1999, he has probably seen the behavior of commodity prices over several business cycles.

Despite low copper prices, the company remains solidly profitable and its balance sheet is not as leveraged as some of its peers."

You can view the list of recent insider transactions for Southern Copper Corp. here.

P/E: 21.46Forward P/E: 20.1Industry P/E: 14.65
P/S: 3.99Price/Book: 3.81EV/EBITDA: 11.28
Market Cap: $21.47BAvg. Daily Volume: 1,830,40052 Week Range: $23.41 - $33.31

2. SolarCity Corporation (SCTY): $29.04

Chairman of the Board and 10% owner Elon Musk acquired 198,615 shares of this solar systems installer, paying $26.45 per share for a total amount of $5.25 million. These shares were purchased indirectly through a trust.

Following his $7.79 million purchase last week, the stock rebounded more than 12% this week. We wrote the following about the company last week,

"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: 7.87Price/Book: 3.44EV/EBITDA: -11.61
Market Cap: $2.83BAvg. Daily Volume: 3,742,09052 Week Range: $24.07 - $63.79

3. Anadarko Petroleum Corporation (APC): $58.74

Director Peter J. Fluor acquired 50,000 shares of this independent oil & gas company, paying $60.81 per share for a total amount of $3.04 million. Mr. Fluor increased his stake by 168.02% to 79,758 shares with this purchase.

You can view the list of recent insider transactions for Anadarko Petroleum Corporation here.

P/E: N/AForward P/E: N/AIndustry P/E: 10.99
P/S: 2.79Price/Book: 2.15EV/EBITDA: 10.92
Market Cap: $29.85BAvg. Daily Volume: 5,431,07052 Week Range: $57.86 - $95.94

4. Scientific Games Corporation (SGMS): $8.3

Shares of this casino and lottery equipment provider were acquired by 3 insiders:

  • Director Ronald O. Perelman acquired 300,000 shares, paying $8.02 per share for a total amount of $2.41 million. These shares were purchased indirectly by MacAndrews & Forbes Inc.

  • President and CEO Michael Gavin Isaacs acquired 30,000 shares, paying $7.96 per share for a total amount of $238,800. Mr. Isaacs increased his stake by 203.33% to 44,754 shares with this purchase.

You can view the list of recent insider transactions for Scientific Games Corporation here.

P/E: N/AForward P/E: N/AIndustry P/E: N/A
P/S: 0.29Price/Book: N/AEV/EBITDA: 13.03
Market Cap: $715.72MAvg. Daily Volume: 1,175,85052 Week Range: $7.51 - $17.12

5. Ares Management, L.P. (ARES): $14

Shares of this asset management company were acquired by 3 insiders:

  • Co-Founder & Partner David B. Kaplan acquired 91,667 shares, paying $13.85 per share for a total amount of $1.27 million. These shares were purchased indirectly by Trently Holdings, LLC.

  • Co-Founder & Partner Bennett Rosenthal acquired 91,666 shares, paying $13.82 per share for a total amount of $1.27 million. These shares were purchased indirectly through a trust.

  • EVP, CLO & Secretary Michael D. Weiner acquired 5,000 shares, paying $13.81 per share for a total amount of $69,050. Mr. Weiner increased his stake by 17.27% to 33,947 shares with this purchase.

You can view the list of recent insider transactions for Ares Management, L.P. here.

P/E: 52.43Forward P/E: 7.91Industry P/E: 15.16
P/S: 3.58Price/Book: 4.31EV/EBITDA: 40.29
Market Cap: $1.13BAvg. Daily Volume: 74,84652 Week Range: $13.56 - $21.84

You can view the full list of purchases from this Insider Buying page.

Notable Insider Sales:

1. Hawaiian Holdings Inc. (HA): $37.73

Shares of this airline company were sold by 2 insiders:

  • Director Zac Hirzel sold 500,000 shares for $35.87, generating $17.93 million from the sale. These shares were sold indirecty by Hirzel Capital.

  • President and CEO Mark B. Dunkerley sold 71,000 shares for $35.15, generating $2.49 million from the sale.

You can view the list of recent insider transactions for Hawaiian Holdings Inc. here.

P/E: 15.33Forward P/E: 11.75Industry P/E: 14.62
P/S: 0.84Price/Book: 5.2EV/EBITDA: 5.37
Market Cap: $2.01BAvg. Daily Volume: 1,205,84052 Week Range: $18.01 - $38.52

2. ServiceNow, Inc. (NOW): $86.19

Shares of this software-as-a-service provider were sold by 3 insiders:

  • Director Paul V. Barber sold 100,000 shares for $84.43, generating $8.44 million from the sale. These shares were sold indirectly through a trust.

  • Chief Operating Officer Daniel McGee sold 68,750 shares for $85.62, generating $5.89 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.

  • Chief Financial Officer Michael Scarpelli sold 40,000 shares for $83.23, generating $3.33 million from the sale. 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 ServiceNow, Inc. here.

P/E: N/AForward P/E: 151.21Industry P/E: 20.39
P/S: 14.85Price/Book: 26.22EV/EBITDA: -116.98
Market Cap: $13.70BAvg. Daily Volume: 1,385,11052 Week Range: $59.58 - $87.21

3. Extra Space Storage Inc. (EXR): $82.94

Executive Chairman Kenneth M. Woolley sold 200,000 shares of this self-storage facilities REIT for $80.68, generating $16.14 million from the sale.

You can view the list of recent insider transactions for Extra Space Storage Inc. here.

P/E: 43.65Forward P/E: 23.17Industry P/E: 37.31
P/S: 13.63Price/Book: 4.73EV/EBITDA: 27.54
Market Cap: $10.24BAvg. Daily Volume: 1,013,41052 Week Range: $56.85 - $83.06

4. Nevro Corp. (NVRO): $52.61

Shares of this medical device company were sold by 3 insiders:

  • Director Wilfred E. Jaeger sold 175,000 shares for $52.24, generating $9.14 million from the sale. These shares were sold indirectly by Three Arch Partners IV, L.P.

  • Chief Executive Officer Michael F. Demane sold 40,001 shares for $50.52, generating $2.02 million from the sale. Some of these shares were sold indirectly through a trust and 26,667 shares were sold from direct holdings.

  • Chief Financial Officer Andrew H. Galligan sold 20,000 shares for $51.29, generating $1.03 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.

Mr. Market's bipolar nature is all the more interesting when you consider companies like Nevro. While some high growth unprofitable companies have recently seen big declines in their stock prices, Nevro trades at 32 times sales. Yes sales, not earnings.

The company has experienced high double-digit growth in revenue and its chronic pain management device was approved by the FDA ahead of schedule this May. There is always the possibility that the company might grow into this valuation or get acquired by Johnson & Johnson (JNJ), Medtronic (MDT) or Novo Nordisk (NVO), each of which hold a stake a company. However the company has posted operating losses in each of the last three quarters that exceeds the revenue generated in each of those quarters. For a company with a market cap of $1.47 billion, revenue for 2015 is expected to be $60.5 million (mid-point of company's guidance).

You can view the list of recent insider transactions for Nevro Corp. here.

P/E: N/AForward P/E: N/AIndustry P/E: N/A
P/S: 31.68Price/Book: 5.99EV/EBITDA: -22.62
Market Cap: $1.47BAvg. Daily Volume: 475,34552 Week Range: $26.51 - $65.5

5. Regeneron Pharmaceuticals, Inc. (REGN): $579.57

Shares of this biotech company were sold by 2 insiders:

  • Chairman of the Board P. Roy Vagelos sold 17,240 shares for $587.90, generating $10.14 million from the sale.

  • Director George L. Sing sold 3,500 shares for $580.00, generating $2.03 million from the sale.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 Regeneron Pharmaceuticals, Inc. here.

P/E: 114.47Forward P/E: 38.95Industry P/E: 27.17
P/S: 15.78Price/Book: 18.22EV/EBITDA: 45.09
Market Cap: $61.46BAvg. Daily Volume: 917,29852 Week Range: $383.87 - $605.93

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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