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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 March 4, 2016

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.

P/E: N/AForward P/E: N/AIndustry P/E: 23.99
P/S: 13.12Price/Book: 6.43EV/EBITDA: -36.66
Market Cap: $4.55BAvg. Daily Volume: 1,303,56052 Week Range: $26.02 - $52.33

2. Weight Watchers International, Inc. (WTW): $14.27

Shares of this weight management services provider were acquired by 7 insiders:

  • Director Raymond Debbane acquired 83,125 shares, paying $12.03 per share for a total amount of $1 million. Mr. Debbane increased his stake by 339.38% to 107,618 shares with this purchase.

  • Director Sacha Lainovic acquired 83,125 shares, paying $12.04 per share for a total amount of $1 million. Mr. Lainovic increased his stake by 339.38% to 107,618 shares with this purchase.

  • Director Christopher J. Sobecki acquired 50,000 shares, paying $12.20 per share for a total amount of $609,815. Mr. Sobecki increased his stake by 204.14% to 74,493 shares with this purchase.

  • Director Philippe Amouyal acquired 30,000 shares, paying $11.86 per share for a total amount of $355,800. Mr. Amouyal increased his stake by 122.48% to 54,493 shares with this purchase.

  • Director Jonas Fajgenbaum acquired 20,000 shares, paying $12.08 per share for a total amount of $241,640. Mr. Fajgenbaum increased his stake by 81.66% to 44,493 shares with this purchase.

  • Director Denis F. Kelly acquired 10,000 shares, paying $12.69 per share for a total amount of $126,892. Mr. Kelly increased his stake by 65.54% to 25,258 shares with this purchase.

  • Director Cynthia Elkins acquired 795 shares, paying $12.44 per share for a total amount of $9,888. Ms. Elkins increased her stake by 9.43% to 9,230 shares with this purchase.

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

Weight Watchers - The Oprah Effect

You can view the list of recent insider transactions for Weight Watchers International, Inc. here.

P/E: 25.48Forward P/E: 13.46Industry P/E: 22.36
P/S: 0.77Price/Book: N/AEV/EBITDA: 12.25
Market Cap: $907.87MAvg. Daily Volume: 4,910,71052 Week Range: $3.67 - $28.05

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.

P/E: N/AForward P/E: N/AIndustry P/E: N/A
P/S: 14Price/Book: 2.78EV/EBITDA: -7.47
Market Cap: $1.26BAvg. Daily Volume: 533,06652 Week Range: $19.86 - $60.79

4. La Jolla Pharmaceutical Co. (LJPC): $18.82

Shares of this biopharmaceutical company were acquired by 2 insiders:

  • Director Kevin C. Tang acquired 480,000 shares, paying $17.82 per share for a total amount of $8.55 million. These shares were purchased indirectly by Tang Capital Partners, LP.

  • President, CEO & Secretary George F. Tidmarsh acquired 2,000 shares, paying $16.57 per share for a total amount of $33,140. Mr. Tidmarsh increased his stake by 0.14% to 1,425,086 shares with this purchase.

You can view the list of recent insider transactions for La Jolla Pharmaceutical Co. here.

P/E: N/AForward P/E: N/AIndustry P/E: 23.99
P/S: 327.95Price/Book: 2.94EV/EBITDA: -5.22
Market Cap: $343.31MAvg. Daily Volume: 212,05752 Week Range: $12.68 - $44.99

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.

P/E: 6.42Forward P/E: 10.69Industry P/E: 14.2
P/S: 0.28Price/Book: 2.05EV/EBITDA: 2.92
Market Cap: $2.57BAvg. Daily Volume: 2,551,11052 Week Range: $24.43 - $51.31

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:

  • Director Lloyd I. Miller sold 110,003 shares for $118.48, generating $13.03 million from the sale. 20,525 of these shares were sold indirectly through various trusts and entities.

  • Chief Legal Officer Seth Weisberg sold 11,096 shares for $120.63, generating $1.34 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.

  • VP, Postal Affairs & JP Leon sold 5,193 shares for $118.89, generating $617,386 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 Stamps.com Inc. here.

P/E: N/AForward P/E: 19.84Industry P/E: 33.03
P/S: 9.28Price/Book: 8.3EV/EBITDA: 32.68
Market Cap: $2.03BAvg. Daily Volume: 454,12152 Week Range: $53.91 - $123.45

2. The Priceline Group Inc. (PCLN): $1297.71

Shares of this online travel company were sold by 2 insiders:

  • Director Jeffery H. Boyd sold 10,400 shares for $1286.66, generating $13.38 million from the sale. These shares were sold indirectly by a charitable foundation controlled by Mr. Boyd.

  • President & COO, Booking.com Gillian Tans sold 161 shares for $1283.59, generating $206,658 from the sale.

You can view the list of recent insider transactions for The Priceline Group Inc. here.

P/E: 26.24Forward P/E: 16.07Industry P/E: 21.12
P/S: 7.01Price/Book: 7.35EV/EBITDA: 19.39
Market Cap: $64.39BAvg. Daily Volume: 736,67252 Week Range: $954.02 - $1476.52

3. BlackRock, Inc. (BLK): $323.76

Shares of this asset management company were sold by 2 insiders:

  • Chairman and CEO Laurence Fink sold 37,600 shares for $321.79, generating $12.09 million from the sale.

  • Senior Managing Director J. Richard Kushel sold 3,161 shares for $313.36, generating $990,546 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 BlackRock, Inc. here.

P/E: 16.36Forward P/E: 14.52Industry P/E: 15.83
P/S: 4.69Price/Book: 1.88EV/EBITDA: 10.51
Market Cap: $53.61BAvg. Daily Volume: 952,19752 Week Range: $275 - $380.99

4. ResMed Inc. (RMD): $57.85

Shares of this medical appliances & equipment company were sold by 4 insiders:

  • Director Peter C. Farrell sold 139,980 shares for $57.31, generating $8.02 million from the sale.

  • Director Richard Sulpizio sold 36,000 shares for $57.88, generating $2.08 million from the sale.These shares were sold as a result of exercising options immediately prior to the sale.

  • Chief Financial Officer Brett Sandercock sold 30,000 shares for $57.61, generating $1.73 million from the sale. These shares were sold indirectly through a trust.

  • President - ResMed Europe Anne Reiser sold 1,946 shares for $57.06, generating $111,039 from the sale.

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

P/E: 23.52Forward P/E: 19.16Industry P/E: N/A
P/S: 4.62Price/Book: 5.27EV/EBITDA: 15.88
Market Cap: $8.10BAvg. Daily Volume: 1,277,76052 Week Range: $48.99 - $75.33

5. Atmel Corporation (ATML): $8.12

Shares of this semiconductor company were sold by 3 insiders:

  • President & CEO Steven Laub sold 997,025 shares for $8.10, generating $8.08 million from the sale.

  • SVP & CFO Stephen A. Skaggs sold 252,327 shares for $8.10, generating $2.04 million from the sale.

  • SVP, Chief Legal Officer Scott M. Wornow sold 225,000 shares for $8.09, generating $1.82 million from the sale.

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

P/E: 135.33Forward P/E: 20.82Industry P/E: 38.51
P/S: 2.91Price/Book: 3.91EV/EBITDA: 26.93
Market Cap: $3.42BAvg. Daily Volume: 7,557,20052 Week Range: $5.84 - $10.5

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.

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

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