posted on 19 June 2016
by Asif Suria
Insider buying declined last week with insiders buying $81.74 million of stock compared to $136.88 million in the week prior. Selling also decreased with insiders selling $1.15 billion of stock last week compared to $1.28 billion in the week prior. One of the insider purchases that has not been making our list for the last two weeks because it is a purchase by a 10% owner was the purchase of Land's End (LE) by Eddie Lampert.
For those of you who have been following the train wreck called Sears Holdings (SHLD), you would recollect that Land's End was one of several companies spun out of Sears over the last few years. If you haven't followed the Sears saga, Business Insider covers it in great detail in an article published last week called Sears' obsession with Wall Street is killing the retailer for good.
Some deep value investors including Bruce Berkowitz of Fairholme Capital Management believe there is a lot of value in Sears as you can see from Fairholme's purchases of Sears but the vast majority of investors have lost confidence in Mr. Lampert's ability to turn around the company. It is interesting that Mr. Lampert continues to buy shares of both Land's End (LE) and Sears Hometown & Outlet Stores (SHOS) after their spin-offs from Sears. It is possible that Mr. Berkowitz is doing the same but doesn't have to report those additional purchases because Fairholme is not a 10% owner in those companies. The possibility that this trio of companies represent bargains with tremendous potential certainly exists but thus far it has been challenging for investors who are not as close to the companies as Mr. Lampert to see that potential.
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 14.06. In other words, insiders sold more than 14 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 9.35. 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 June 17, 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. Valeant Pharmaceuticals International, Inc. (VRX): $22.04
Chairman & CEO Joseph C. Papa acquired 202,000 shares of this Canadian pharmaceutical company, paying $24.48 per share for a total amount of $4.94 million. Mr. Papa increased his stake by 9.02% to 2,442,199 shares with this purchase.
Speaking of train wrecks, there hasn't been a greater one on Wall Street this year than Valeant, which has seen its stock drop nearly 80% since the start of the year and wiping out $27 billion in shareholder value in the process. With its business model in jeopardy and a leveraged balance sheet lumbering under $30.67 billion on net debt, this is an incredibly complex situation. Whether this purchase by the new CEO is because he sees values in the company or because he is signaling the market remains to be seen.
You can view the list of recent insider transactions for Valeant Pharmaceuticals International, Inc. here.
2. The Brink's Company (BCO): $29
Shares of this security & protection services provider were acquired by 2 insiders:
You can view the list of recent insider transactions for The Brink's Company here.
3. Advanced Drainage Systems, Inc. (WMS): $26.26
Chairman, President & CEO Joseph A. Chlapaty acquired 100,500 shares of this thermoplastic corrugated pipes company, paying $26.51 per share for a total amount of $2.66 million. These shares were purchased indirectly through a trust.
You can view the list of recent insider transactions for Advanced Drainage Systems, Inc. here.
4. JMP Group LLC (JMP): $5.56
CEO Joseph A. Jolson acquired 489,221 shares of this financial services firm, paying $5.33 per share for a total amount of $2.61 million. These shares were purchased indirectly through a trust.
You can view the list of recent insider transactions for JMP Group LLC here.
5. Connecture, Inc. (CNXR): $2.43
Shares of this health insurance distributor were acquired by 7 insiders:
You can view the list of recent insider transactions for Connecture, Inc. here.
You can view the full list of purchases from this Insider Buying page.
Notable Insider Sales:
1. Facebook, Inc. (FB): $113.02
Shares of Facebook were sold by 4 insiders:
You can view the list of recent insider transactions for Facebook, Inc. here.
2. Workday, Inc. (WDAY): $78.6
Shares of this application software company were sold by 5 insiders:
You can view the list of recent insider transactions for Workday, Inc. here.
3. Zayo Group Holdings, Inc. (ZAYO): $26.97
Shares of this bandwidth infrastructure solutions provider were sold by 2 insiders:
You can view the list of recent insider transactions for Zayo Group Holdings, Inc. here.
4. Juno Therapeutics Inc. (JUNO): $42.4
Shares of this biotech company were sold by 2 insiders:
You can view the list of recent insider transactions for Juno Therapeutics Inc. here.
5. Douglas Emmett Inc (DEI): $34
Chairman of the Board Dan A. Emmett sold 140,000 shares of this apartment REIT for $33.85, generating $4.74 million from the sale. These shares were sold indirectly through a trust.
You can view the list of recent insider transactions for Douglas Emmett Inc 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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