Insider Trading 22 February 2013: Professional Investors Sales Distorting Buy-Sell Ratios

by Asif Suria

Insider buying dropped again with insiders purchasing $14.89 million of their stock last week compared to $27.62 million in the week prior. Selling jumped sharply with insiders selling $3.46 billion of stock last week compared to $1.29 billion in the week prior. A large part of this increase was related to sales through secondary offerings by professional investors such as Bain Capital’s sale of sensors manufacturer Sensata Technologies (ST) and hospitals operator HCA Holdings (HCA) as well as CCMP Capital’s sale of generator company Generac Holdings (GNRC).

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 232.51. In other words, insiders sold almost 233 times as much stock as they purchased. After going up for 5 weeks in a row, this is the highest the ratio has ever been since we started computing it in June 2010. Excluding the aforementioned sales by professional investors would have brought the ratio down to 62.5.

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 February 22, 2013

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. Echo Global Logistics, Inc. (ECHO): $18.83

Director John R. Walter acquired 80,639 shares of this supply chain management services provider, paying $19.10 per share for a total amount of $1.54 million. Mr. Walter increased his stake by 3041.83% to 83,290 shares with this purchase.

You can view the list of recent insider transactions for Echo Global Logistics, Inc. here.

2. Aon plc (AON): $60.79

Director Lester B. Knight acquired 25,000 shares of this insurance and reinsurance brokerage, paying $57.10 per share for a total amount of $1.43 million. These shares were purchased indirectly by a family partnership.

You can view the list of recent insider transactions for Aon plc here.

3. Opko Health, Inc. (OPK): $7.03

CEO & Chairman Phillip Frost M.D. acquired 180,500 shares of this medical devices and drug development company, paying $6.69 per share for a total amount of $1.2 million. These shares were purchased indirectly by Frost Gamma Investments Trust.

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

4. PennantPark Investment Corporation (PNNT): $11.6

Director Jeffrey Flug acquired 85,900 shares of this business development company, paying $11.36 per share for a total amount of $975,794. These shares were purchased indirectly through various trusts.

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

5. Fastenal Company (FAST): $51.47

Director Darren R. Jackson acquired 10,000 shares of this industrial and construction materials retailer, paying $52.87 per share for a total amount of $528,680.

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

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

Notable Insider Sales:

1. NetSuite Inc. (N): $68.83

Shares of this cloud enterprise software company were sold by 7 insiders:

• Chief Operating Officer James McGeever sold 109,997 shares for $67.69, generating $7.45 million from the sale. 56,475 of these shares were sold as a result of exercising options immediately prior to the sale.
• President & CEO Zachary Nelson sold 61,800 shares for $67.84, generating $4.19 million from the sale.
• Chief Financial Officer Ronald S. Gill sold 31,543 shares for $67.84, generating $2.14 million from the sale.
• SVP Worldwide Sales & Distrib. James Burr Ramsey sold 29,683 shares for $67.84, generating $2.01 million from the sale.
• CTO & Chairman of the Board Evan Goldberg sold 25,377 shares for $67.65, generating $1.72 million from the sale.
• SVP, General Counsel & Sec. Douglas P. Solomon sold 17,865 shares for $68.21, generating $1.22 million from the sale. 250 of these shares were sold as a result of exercising options immediately prior to the sale.
• EVP & Chief Customer Officer Timothy Dilley sold 14,204 shares for $67.84, generating $963,578 from the sale.

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

2. Fidelity National Information Services, Inc. (FIS): $37

Shares of this banking software provider were sold by 2 insiders:

• Corporate EVP & CFO Michael D. Hayford sold 360,806 shares for $36.66, generating $13.23 million from the sale.
• Director Keith W. Hughes sold 21,542 shares for $37.06, generating $798,347 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 Fidelity National Information Services, Inc. here.

3. Willis Group Holdings Public Limited Company (WSH): $36.79

Director Joseph J. Plumeri sold 314,027 shares of this insurance company for $36.72, generating $11.53 million from the sale.

You can view the list of recent insider transactions for Willis Group Holdings Public Limited Company here.

4. F5 Networks, Inc. (FFIV): $101.06

Shares of this networking company were sold by 2 insiders:

• President and CEO John McAdam sold 85,000 shares for $101.07, generating $8.59 million from the sale.
• EVP, World Wide Sales Thomas David Feringa sold 1,530 shares for $104.32, generating $159,609 from the sale.

You can view the list of recent insider transactions for F5 Networks, Inc. here.

5. Danaher Corp. (DHR): $61.46

Shares of this industrial products and equipment company were sold by 2 insiders:

• President and CEO Lawrence H. Culp sold 128,000 shares for $60.90, generating $7.79 million from the sale.
• Senior VP & GC Jonathan P. Graham sold 3,561 shares for $60.83, generating $216,612 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 Danaher Corp. here.

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