posted on 06 March 2016
Insider Trading 04 March 2016: Insiders Appear To Be Back To Their Usual Pattern Of Selling A Lot Of Stock And Buying Very Little
by Asif Suria
Insider buying decreased last week with insiders buying $85.92 million of stock compared to $154.2 million in the week prior. Selling on the other hand doubled with insiders selling $2.2 billion of stock last week compared to $1.06 billion in the week prior.
With the market rallying for the third week in a row, insiders appear to be back to their usual pattern of selling a lot of stock and buying very little. We saw remarkable broad-based rallies especially in the beaten down commodities sector and specifically in energy related stocks last week. One offshore oil drilling company, SeaDrill Limited (SDRL), was up as much as 177% on Friday before settling down a little and posting a gain of just 121% for the day. SeaDrill is heavily leveraged and investors were pricing the company for bankruptcy. An energy trader I follow on Twitter said the following after the SeaDrill rally, "Shout out to the chimp who was paying up 170% for the zombie driller 15 minutes ago. It's a steal now only +115%". While we have not seen any insider activity at SeaDrill, we did see a small purchase by the CEO of another offshore driller, Atwood Oceanics (ATW) last month.
One of the most interesting footnotes I have seen in an insider filing showed up last week in thepurchase filed by the CEO of Exact Sciences (EXAS). Combing through footnotes of SEC filings can often bring up interesting nuggets of information and Michelle Leder of Footnoted built a business by doing exact that. She eventually sold that business to Morningstar but ended up buying it back from them and went independent again. This Twitter exchange with her explains why the footnote in that filing was interesting and why the stock rallied more than 20% after that filing.
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 25.65. In other words, insiders sold almost 26 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 6.85. 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 04 March 2016
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. Seattle Genetics, Inc. (SGEN): $32.53
Director Felix Baker acquired 675,922 shares of this biotech company, paying $31.77 per share for a total amount of $21.48 million. These shares were purchased indirectly by Baker Bros. Advisors LP.
This is the third week in a row we are reporting on insider purchases of Seattle Genetics by the Baker Brothers.
You can view the list of recent insider transactions for Seattle Genetics, Inc. here.
2. Weight Watchers International, Inc. (WTW): $14.27
Shares of this weight management services provider were acquired by 7 insiders:
Weight Watchers has taken investors on quite the roller coaster ride over the last six months as can be seen in the chart below. The stock more than doubled overnight last October after Oprah Winfrey announced that she purchased a 10% stake in the company and was joining the board of directors. The stock eventually went on to quadruple thanks to Oprah's investment but has given back most of those gains in recent weeks after the challenges of a difficult business model started weighing down the stock.
Weight Watchers - The Oprah Effect
You can view the list of recent insider transactions for Weight Watchers International, Inc. here.
3. Intra-Cellular Therapies, Inc. (ITCI): $29.27
Director Christopher D. Alafi acquired 100,000 shares of this biopharmaceutical company, paying $29.70 per share for a total amount of $2.97 million. Mr. Alafi increased his stake by 15.90% to 728,828 shares with this purchase.
You can view the list of recent insider transactions for Intra-Cellular Therapies, Inc. here.
4. La Jolla Pharmaceutical Co. (LJPC): $18.82
Shares of this biopharmaceutical company were acquired by 2 insiders:
You can view the list of recent insider transactions for La Jolla Pharmaceutical Co. here.
5. Western Refining, Inc. (WNR): $27.47
President & CEO Jeff A. Stevens acquired 100,000 shares of this crude oil refining company, paying $26.63 per share for a total amount of $2.66 million. Mr. Stevens increased his stake by 3.14% to 3,281,052 shares with this purchase.
You can view the list of recent insider transactions for Western Refining, Inc. here.
You can view the full list of purchases from this Insider Buying page.
Notable Insider Sales:
1. Stamps.com Inc. (STMP): $122.21
Shares of this Internet-based postage solutions provider were sold by 3 insiders:
You can view the list of recent insider transactions for Stamps.com Inc. here.
2. The Priceline Group Inc. (PCLN): $1297.71
Shares of this online travel company were sold by 2 insiders:
You can view the list of recent insider transactions for The Priceline Group Inc. here.
3. BlackRock, Inc. (BLK): $323.76
Shares of this asset management company were sold by 2 insiders:
You can view the list of recent insider transactions for BlackRock, Inc. here.
4. ResMed Inc. (RMD): $57.85
Shares of this medical appliances & equipment company were sold by 4 insiders:
You can view the list of recent insider transactions for ResMed Inc. here.
5. Atmel Corporation (ATML): $8.12
Shares of this semiconductor company were sold by 3 insiders:
You can view the list of recent insider transactions for Atmel Corporation here.
You can view the full list of sales from this Insider Sales page.
Disclaimer Clients of Signal Partners, LLC and I may have positions in any of these stocks at any time. Please do your own due diligence before buying or selling any securities mentioned in this article. We do not warrant the completeness or accuracy of the content or data provided in this article.
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