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posted on 30 July 2016

Insider Trading 29 July 2016: Half The Selling Related To ValueAct Liquidating Microsoft Positions

by Asif Suria

to edition 319 of Insider Weekends. Insider buying increased significantly last week with insiders buying $118.43 million of stock compared to $29.17 million in the week prior. Selling also increased with insiders selling $2.12 billion of stock last week compared to $757.96 million in the week prior. Almost half the insider selling this week was related to ValueAct liquidating nearly a third of their position in Microsoft 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 decreased to 17.88. In other words, insiders sold almost 18 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 25.98. 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 July 29, 2016

Insider Sell Buy Ratio July 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. Netflix, Inc. (NFLX): $91.25

Director Jay C. Hoag acquired 600,000 shares of Netflix, paying $86.43 per share for a total amount of $51.86 million. These shares were purchased indirectly through various Technology Crossover Ventures (TCV) funds.

We normally exclude transactions by funds and venture capital firms but decided to make an exception in this case because of Mr. Hoag's history of insider purchases.

TCV is a well known venture capital company that mostly invests in private companies but sometimes ventures into public markets. The company first invested in Netflix (NFLX) back in 1999 and Mr. Hoag's purchase of Netflix shares in May 2012 at prices in the low $70′s (pre-split) were one of the best instances of insider purchases I have seen since I started tracking this data more than 5 years ago. Netflix shares had dropped dramatically before Mr. Hoag's purchases on news that the company was going to split itself a DVD mailing service called Qwikster and a streaming service. Much to the relief of investors, the company eventually abandoned that plan and the stock eventually went up 10 fold. Unfortunately for TCV, they did not hold through that entire 1,000%+ increase.

We also reported on Mr. Hoag's purchases of Zillow (Z) earlier this year on behalf of TCV at an average price of $19.98. The stock has almost doubled since his purchase five months ago.

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

P/E: 285.16Forward P/E: 102.53Industry P/E: 39.97
P/S: 5.15Price/Book: 16.26EV/EBITDA: 126.38
Market Cap: $39.12BAvg. Daily Volume: 12,750,80052 Week Range: $79.95 - $133.27

2. Abbott Laboratories (ABT): $44.75

Chairman and CEO Miles D. White acquired 731,500 shares of this medical appliances & equipment company, paying $43.23 per share for a total amount of $31.62 million. Mr. White increased his stake by 36.38% to 2,742,017 shares with this purchase.

You can view the list of recent insider transactions for Abbott Laboratories here.

P/E: 29.54Forward P/E: 18.27Industry P/E: 29.34
P/S: 3.18Price/Book: 3.15EV/EBITDA: 15.8
Market Cap: $65.74BAvg. Daily Volume: 11,048,80052 Week Range: $36 - $51.17

3. Fairmount Santrol Holdings Inc. (FMSA): $6.85

Director Charles D. Fowler acquired 1,666,666 shares of this sand-based proppant solutions provider, paying $5.95 per share for a total amount of $9.92 million. Mr. Fowler increased his stake by 4332.83% to 1,705,132 shares with this purchase.

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

P/E: N/AForward P/E: N/AIndustry P/E: 18.72
P/S: 1.57Price/Book: N/AEV/EBITDA: 29.2
Market Cap: $1.28BAvg. Daily Volume: 2,099,95052 Week Range: $1 - $8.83

4. General Electric Company (GE): $31.14

Chairman and CEO Jeffrey R. Immelt acquired 50,000 shares of General Electric, paying $31.45 per share for a total amount of $1.57 million. Mr. Immelt increased his stake by 2.33% to 2,198,688 shares with this purchase.

You can view the list of recent insider transactions for General Electric Company here.

P/E: 26.3Forward P/E: 18Industry P/E: 23.31
P/S: 2.33Price/Book: 3.34EV/EBITDA: 24.05
Market Cap: $286.35BAvg. Daily Volume: 35,556,10052 Week Range: $19.37 - $33

5. Delta Air Lines, Inc. (DAL): $38.75

EVP & CFO Paul A. Jacobson acquired 25,000 shares of this airline, paying $38.91 per share for a total amount of $972,770. Mr. Jacobson increased his stake by 8.23% to 328,631 shares with this purchase.

You can view the list of recent insider transactions for Delta Air Lines, Inc. here.

P/E: 6.31Forward P/E: 6.59Industry P/E: 9.39
P/S: 0.74Price/Book: 2.53EV/EBITDA: 4.1
Market Cap: $28.95BAvg. Daily Volume: 11,665,80052 Week Range: $32.6 - $52.77

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

Notable Insider Sales:

1. Microsoft Corporation (MSFT): $56.68

Shares of Microsoft were sold by 2 insiders:

  • Director Mason Morfit sold 18,000,000 shares for $56.12, generating $1.01 billion from the sale. These shares were sold indirectly by ValueAct Capital Master Fund.

  • Founder Bill Gates sold 8,000,000 shares for $56.28, generating $450.22 million from the sale.

ValueAct sold a whole lot more than Mr. Gates' large periodic sales and liquidated nearly a third of their position in Microsoft. With offices in San Francisco and Boston, the fund prefers taking concentrated positions in a limited number of companies that are fundamentally undervalued.

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

P/E: 26.99Forward P/E: 17.6Industry P/E: 29.48
P/S: 5.14Price/Book: 6.1EV/EBITDA: 13.74
Market Cap: $442.56BAvg. Daily Volume: 31,773,90052 Week Range: $39.72 - $57.29

2. Nucor Corporation (NUE): $53.64

Shares of this steel company were sold by 5 insiders:

  • Executive Vice President Ladd R. Hall sold 92,291 shares for $52.40, generating $4.84 million from the sale. 52,631 of these shares were sold as a result of exercising options immediately prior to the sale.

  • Executive Vice President James R. Darsey sold 71,465 shares for $52.45, generating $3.75 million from the sale. 52,631 of these shares were sold as a result of exercising options immediately prior to the sale.

  • Chairman, President and CEO John J. Ferriola sold 12,128 shares for $54.12, generating $656,345 from the sale.

  • Executive Vice President Raymond S. Napolitan sold 10,000 shares for $52.39, generating $523,899 from the sale.

  • CFO, Treasurer and EVP James D. Frias sold 9,000 shares for $53.14, generating $478,269 from the sale.

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

P/E: 36.76Forward P/E: 16.71Industry P/E: 124.37
P/S: 1.1Price/Book: 2.27EV/EBITDA: 9.71
Market Cap: $17.05BAvg. Daily Volume: 2,859,92052 Week Range: $33.9 - $57.08

3. Tupperware Brands Corporation (TUP): $62.68

Shares of this kitchen products company were sold by 3 insiders:

  • Chairman and CEO E. V. Goings sold 150,000 shares for $62.50, generating $9.37 million from the sale.

  • Director Angel R. Martinez sold 10,000 shares for $62.23, generating $622,272 from the sale.

  • Group President Asha Gupta sold 917 shares for $62.70, generating $57,496 from the sale.

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

P/E: 16.67Forward P/E: 13.45Industry P/E: 23.17
P/S: 1.43Price/Book: 17.6EV/EBITDA: 10.74
Market Cap: $3.17BAvg. Daily Volume: 624,47652 Week Range: $42.6 - $63.9

4. PulteGroup, Inc. (PHM): $21.18

Shares of this home builder were sold by 5 insiders:

  • Chief Executive Officer Richard J. Dugas sold 243,115 shares for $21.96, generating $5.34 million from the sale.

  • Exec. Vice President-HR James R. Ellinghausen sold 125,000 shares for $21.60, generating $2.7 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.

  • EVP & Chief Operating Officer Harmon D. Smith sold 53,582 shares for $22.05, generating $1.18 million from the sale.

  • EVP, Ch. Legal Ofcr, Corp Secy Steven M. Cook sold 20,000 shares for $22.06, generating $441,200 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.

  • VP Finance & Controller James L. Ossowski sold 11,655 shares for $25.75, generating $300,085 from the sale. 10,000 of these shares were sold indirectly through a trust and 1,655 of these shares were sold indirectly through 401(k).

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

P/E: 13.94Forward P/E: 9.9Industry P/E: 15
P/S: 1.1Price/Book: 1.55EV/EBITDA: 10.68
Market Cap: $7.28BAvg. Daily Volume: 4,915,12052 Week Range: $14.61 - $22.4

5. JB Hunt Transport Services Inc. (JBHT): $83.13

Shares of this trucking company were sold by 2 insiders:

  • Director Earl Wayne Garrison sold 50,000 shares for $84.04, generating $4.2 million from the sale.

  • EVP, President Intermodal Terrence D. Matthews sold 18,122 shares for $81.50, generating $1.48 million from the sale.

You can view the list of recent insider transactions for JB Hunt Transport Services Inc. here.

P/E: 21.85Forward P/E: 18.94Industry P/E: 19.55
P/S: 1.48Price/Book: 6.79EV/EBITDA: 9.53
Market Cap: $9.36BAvg. Daily Volume: 764,82452 Week Range: $63.58 - $89.43

You can view the full list of sales from this Insider Sales page.


Disclaimer: I do not have any positions in any of the stocks mentioned in this article. 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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