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posted on 01 May 2016

Insider Trading 29 April 2016: Buying Driven By United Continental Holdings

by Asif Suria

Insider buying increased significantly last week with insiders buying $120.89 million of stock compared to $8.03 million in the week prior. Selling was flat with insiders selling $596.16 million of stock last week compared to $596.17 million in the week prior.

Over 85% of the insider buying this week was driven by a cluster of insider purchases in United Continental Holdings (UAL) as discussed below.

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 to 4.93. In other words, insiders sold almost 5 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 74.28. 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 April 29, 2016

Insider Sell Buy Ratio April 29, 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. United Continental Holdings, Inc. (UAL): $45.81

Shares of this airline were acquired by 12 insiders:

  • Director Edward Shapiro acquired 1,905,000 shares, paying $52.10 per share for a total amount of $99.25 million. These shares were purchased indirectly by PAR Investment Partners.

  • Director Barney Harford acquired 60,000 shares, paying $49.06 per share for a total amount of $2.94 million.

  • Director James M. Whitehurst acquired 10,000 shares, paying $49.23 per share for a total amount of $492,255.

  • EVP and General Counsel Brett J. Hart acquired 5,000 shares, paying $49.09 per share for a total amount of $245,440. Mr. Hart increased his stake by 9.16% to 59,579 shares with this purchase.

  • SVP- Finance & Acting CFO Gerald Laderman acquired 5,000 shares, paying $48.78 per share for a total amount of $243,905. Mr. Laderman increased his stake by 13.98% to 40,774 shares with this purchase.

  • EVP & COO Gregory L. Hart acquired 2,000 shares, paying $49.90 per share for a total amount of $99,795. Mr. Hart increased his stake by 5.80% to 36,466 shares with this purchase.

  • EVP HR and Labor Relations Michael P. Bonds acquired 2,000 shares, paying $48.38 per share for a total amount of $96,766. Mr. Bonds increased his stake by 3.93% to 52,865 shares with this purchase.

  • Director James A. Kennedy acquired 2,000 shares, paying $49.90 per share for a total amount of $99,800. Mr. Kennedy increased his stake by 222.22% to 2,900 shares with this purchase.

  • Director Robert A. Milton acquired 1,000 shares, paying $49.14 per share for a total amount of $49,140.

These purchases follow the $1 million purchase by the CEO Oscar Munoz that we reported on last week. Mr. Munoz is back from a medical leave as a result of a heart attack less than two months after he took the CEO job last year. It appears that he is well liked within the company as seen by the picketing by 30 pilots in front of the offices of the investment manager PAR Capital Management to support their CEO and his vision to turn around the company.

United Continental is certainly in need of significant turning around as discussed in the Bloomberg Businessweek article United's Quest To Be Less Awful. While the stock is up over 78% over the last five years, it significantly trails its peers as seen in the chart below. Over the last year, the stock is down 25% even as the favorable tail winds of low oil prices, a growing economy and additional revenue from fees have helped the entire airline industry enjoy a new golden age. The stock is cheap but unloved. So are many other old guard companies like General Motors (GM) and IBM that offer respectable dividends while their investors wait to see if they turn around.

United Continental's 5 Year Stock Chart

United Continental's 5 Year Stock Chart (click to enlarge)

You can view the list of recent insider transactions for United Continental Holdings, Inc. here.

P/E: 2.35Forward P/E: 5.35Industry P/E: 8.41
P/S: 0.46Price/Book: 1.95EV/EBITDA: 3.19
Market Cap: $15.43BAvg. Daily Volume: 5,601,73052 Week Range: $42.17 - $63.9

2. Caterpillar Inc. (CAT): $77.72

Director David L. Calhoun acquired 25,000 shares of this heavy equipment manufacturer, paying $77.44 per share for a total amount of $1.94 million. Mr. Calhoun increased his stake by 307.54% to 33,129 shares with this purchase.

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

P/E: 22.21Forward P/E: 21.83Industry P/E: 22.48
P/S: 0.96Price/Book: 3.06EV/EBITDA: 10.74
Market Cap: $45.38BAvg. Daily Volume: 6,251,86052 Week Range: $56.36 - $89.62

3. Mylan N.V. (MYL): $41.71

Director Melina E. Higgins acquired 35,000 shares of this pharmaceutical company, paying $42.92 per share for a total amount of $1.5 million. These shares were purchased indirectly by Ms. Higgins's husband.

You can view the list of recent insider transactions for Mylan N.V. here.

P/E: 24.54Forward P/E: 7.15Industry P/E: 25.34
P/S: 2.22Price/Book: 2.14EV/EBITDA: 9.36
Market Cap: $20.47BAvg. Daily Volume: 5,937,62052 Week Range: $37.59 - $74.66

4. Performance Sports Group Ltd. (PSG): $3.71

Shares of this sports equipment company were acquired by 2 insiders:

  • Director Daniel M. Friedberg acquired 171,311 shares, paying $3.71 per share for a total amount of $635,102. These shares were purchased indirectly through Sagard Capital Partners, L.P.

  • Executive Vice President / CFO Mark J. Vendetti acquired 20,000 shares, paying $3.60 per share for a total amount of $72,034.

You can view the list of recent insider transactions for Performance Sports Group Ltd. here.

P/E: N/AForward P/E: 11.97Industry P/E: N/A
P/S: 0.26Price/Book: 0.54EV/EBITDA: 11.24
Market Cap: $169.05MAvg. Daily Volume: 1,407,35052 Week Range: $2.8 - $21.72

5. Acacia Research Corporation (ACTG): $4.82

Shares of this patent portfolio company were acquired by 3 insiders:

  • Chief Executive Officer Marvin E. Key acquired 55,000 shares, paying $4.15 per share for a total amount of $228,058. Mr. Key increased his stake by 40.49% to 190,833 shares with this purchase.

  • Director Frank E. Walsh III acquired 35,000 shares, paying $4.13 per share for a total amount of $144,550.

  • Director G. Louis Graziadio acquired 10,000 shares, paying $4.44 per share for a total amount of $44,371. Mr. Graziadio increased his stake by 5.88% to 179,931 shares with this purchase.

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

P/E: N/AForward P/E: 8.31Industry P/E: 19.85
P/S: 1.83Price/Book: 0.73EV/EBITDA: 16.88
Market Cap: $243.21MAvg. Daily Volume: 783,25752 Week Range: $2.82 - $10.86

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

Notable Insider Sales:

1. Fortune Brands Home & Security, Inc. (FBHS): $55.41

Shares of this home and security products company were sold by 2 insiders:

  • Chief Executive Officer Christopher J. Klein sold 390,000 shares for $57.22, generating $22.32 million from the sale. 230,000 of these shares were sold as a result of exercising options immediately prior to the sale.

  • President MasterBrand Cabinets David Randich sold 29,591 shares for $57.17, generating $1.69 million from the sale.

You can view the list of recent insider transactions for Fortune Brands Home & Security, Inc. here.

P/E: 28.64Forward P/E: 18.35Industry P/E: 16.08
P/S: 1.94Price/Book: 3.67EV/EBITDA: 15.09
Market Cap: $8.45BAvg. Daily Volume: 1,514,98052 Week Range: $41.17 - $59.98

2. Lockheed Martin Corporation (LMT): $232.38

Shares of this defense company were sold by 2 insiders:

  • Chairman, Pres. & CEO Marillyn A. Hewson sold 25,000 shares for $233.16, generating $5.83 million from the sale.

  • SVP & General Counsel Maryanne Lavan sold 21,720 shares for $233.19, generating $5.06 million from the sale. 14,720 of 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 Lockheed Martin Corporation here.

P/E: 20.28Forward P/E: 16.88Industry P/E: 19.68
P/S: 1.53Price/Book: 22.77EV/EBITDA: 13.46
Market Cap: $70.41BAvg. Daily Volume: 1,279,25052 Week Range: $181.91 - $234.59

3. QVC Group (QVCA): $26.2

Director Mark C. Vadon sold 366,000 shares of this online commerce company for $26.73, generating $9.78 million from the sale. These shares were sold indirectly by Lake Tana LLC.

You can view the list of recent insider transactions for QVC Group here.

P/E: 13.88Forward P/E: 16.38Industry P/E: 52.55
P/S: N/APrice/Book: 1.8EV/EBITDA: N/A
Market Cap: $12.25BAvg. Daily Volume: 2,163,03052 Week Range: $22.51 - $31.62

4. Wells Fargo & Company (WFC): $49.98

Shares of this bank were sold by 3 insiders:

  • Senior Exec. Vice President David M. Carroll sold 62,300 shares for $50.28, generating $3.13 million from the sale. These shares were sold indirectly through a trust.

  • Sr. Executive Vice President Avid Modjtabai sold 55,000 shares for $50.77, generating $2.79 million from the sale. These shares were sold indirectly through a trust.

  • Sr. Executive Vice President James M. Strother sold 40,000 shares for $50.77, generating $2.03 million from the sale.

You can view the list of recent insider transactions for Wells Fargo & Company here.

P/E: 12.13Forward P/E: 11.33Industry P/E: 11.25
P/S: 3.06Price/Book: 1.49EV/EBITDA: N/A
Market Cap: $252.76BAvg. Daily Volume: 19,860,30052 Week Range: $44.5 - $58.77

5. Philip Morris International, Inc. (PM): $98.12

Shares of this cigarettes company were sold by 2 insiders:

  • Director Louis C. Camilleri sold 33,340 shares for $96.95, generating $3.23 million from the sale.

  • Sr. VP & General Counsel Marc S. Firestone sold 18,000 shares for $97.06, generating $1.75 million from the sale.

You can view the list of recent insider transactions for Philip Morris International, Inc. here.

P/E: 22.2Forward P/E: 20.19Industry P/E: 22.01
P/S: 5.63Price/Book: N/AEV/EBITDA: 15.37
Market Cap: $152.21BAvg. Daily Volume: 4,703,40052 Week Range: $76.54 - $102

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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