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Insider Weekends – April 27, 2012

 April 30, 2012 08:15 AM
 


(By Asif Suria)Welcome to edition ninety nine of Insider Weekends. Insider buying decreased with insiders purchasing $7.9 million of their stock last week compared to $19.9 million in the week prior. Selling more than doubled with insiders selling $1.38 billion worth of stock last week compared to $499.55 million in the week prior.

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 shot up to 174.2. In other words, insiders sold more than 174 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the week prior when the ratio stood at 25.1. Part of this big jump has to do with Bill Gates selling $385.4 million worth of Microsoft stock to most likely fund his foundation buy even excluding that sale, the ratio would have been 125.5.

[Related -Netflix, Inc. (NFLX) Q4 Earnings Preview: What To Watch?]

Interestingly the last time the ratio was this high was almost a year ago on April 29, 2011 when the ratio spiked to 186.8. The S&P 500 dropped for six consecutive weeks from 1363.61 to 1270.98 following that spike. 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.

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. Opko Health, Inc. (OPK): $4.81

CEO & Chairman Phillip Frost M.D. acquired 200,000 shares of this medical devices and drug development company, paying $4.85 per share for a total amount of $970,271. These shares were purchased indirectly by Frost Gamma Investments Trust.

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

P/E: N/AForward P/E: N/AIndustry P/E: 22.56
P/S: 50.94Price/Book: 8.86EV/EBITDA: -70.38
Market Cap: $1.42BAvg. Daily Volume: 1,800,27052 Week Range: $3.15 – $5.85

2. American Spectrum Realty Inc. (AQQ): $5.6

CEO & President William J. Carden acquired 214,340 shares of this commercial real estate company, paying $4.29 per share for a total amount of $919,519. Mr. Carden increased his stake by 35.24% to 822,594 shares with this purchase.

This insider purchase inspired some interest on Monday, April 23, 2012 with an 8% jump in the stock price on a down day. Average trading volume is very low for the company and only 500 shares changed hands the Friday before last, the day of the purchase according to this filing. Quite clearly this was not an open market purchase but I did not find anything in the footnotes or in a press release indicating otherwise.

You can view the list of recent insider transactions for American Spectrum Realty Inc. here.

P/E: 4.48Forward P/E: N/AIndustry P/E: 13.48
P/S: 0.28Price/Book: N/AEV/EBITDA: 11.64
Market Cap: $20.03MAvg. Daily Volume: 3,63952 Week Range: $3.71 – $18.24

3. Life Time Fitness Inc. (LTM): $46.98

Chairman, President and CEO Bahram Akradi acquired 16,905 shares of this health club operator, paying $44.07 per share for a total amount of $745,008. Mr. Akradi increased his stake by 0.71% to 2,398,296 shares with this purchase.

For a health club and nutritional products company, Life Time Fitness appears to be doing very well with operating margins of 17.6% and profit margins of 9.36%. Both revenue and profits have been growing as the company expanded its reach through the recession with 102 locations in 26 markets. Life Time trades at a resonable valuation of 8.86 times EBITDA and carries $678 million in net debt on its balance sheet.

This purchase follows a couple of small purchases by two directors last summer. A number of other insiders including the CFO have been selling shares as you can see from this page.

Voluntary Disclosure: I hold a long position in Life Time in my trading portfolio.

You can view the list of recent insider transactions for Life Time Fitness Inc. here.

P/E: 19.81Forward P/E: 15.01Industry P/E: 42.12
P/S: 1.81Price/Book: 1.89EV/EBITDA: 8.86
Market Cap: $1.93BAvg. Daily Volume: 442,55852 Week Range: $33.15 – $52.68

4. Basic Energy Services, Inc. (BAS): $14.37

Director Steven A. Webster acquired 52,370 shares of this oil services company, paying $13.50 per share for a total amount of $706,995 and also exercised options for 55,000 shares. Mr. Webster increased his stake by 10.83% to 536,070 shares with this purchase.

This is an interesting company that managed to swing from a loss in 2010 to a profit in 2011 as the business scaled to revenue of over $1.24 billion from $728 million in 2010. The company trades for just 3.56 times EBITDA with operating margins of 14.85%. Net margin of 6.23% is lower thanks in part to the high interest expense on the $783 million in debt the company carries on its balance sheet.

Another director also picked up 21,000 shares in two transactions last December and in March of this year. Mr. Webster picked up 100,000 shares last Fall at much higher prices as you can see from this page. The stock is off significantly since last July when it reached an intra-day high of $37.79. The fact that the company missed earnings estimates in three out of the last four quarters partially explains the drop in the stock price.

You can view the list of recent insider transactions for Basic Energy Services, Inc. here.

P/E: 7.05Forward P/E: 6.65Industry P/E: N/A
P/S: 0.43Price/Book: 1.63EV/EBITDA: 3.56
Market Cap: $582.33MAvg. Daily Volume: 1,403,34052 Week Range: $12.49 – $37.79

5. Netflix, Inc. (NFLX): $83.74

Director Richard N. Barton acquired 6,000 shares of Netflix, paying $85.05 per share for a total amount of $510,300. Mr. Barton increased his stake by 1749.27% to 6,343 shares with this purchase.

As I tweeted earlier this week, after years of heavy insider selling, we are seeing the first insider purchase at Netflix after the stock dropped precipitously over the last year. The bears had it right that higher content costs and competition in the streaming space will eventually hit Netflix's margins.

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

P/E: 20.13Forward P/E: 38.06Industry P/E: 31.45
P/S: 1.47Price/Book: 7.33EV/EBITDA: 10.15
Market Cap: $4.64BAvg. Daily Volume: 6,342,42052 Week Range: $62.37 – $304.79

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

Notable Insider Sales:

1. Microsoft Corporation (MSFT): $31.98

Founder Bill Gates sold 12 million shares of Microsoft for $32.12, generating $385.4 million from the sale.

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

P/E: 11.71Forward P/E: 10.52Industry P/E: 28.98
P/S: 3.69Price/Book: 3.93EV/EBITDA: 7.32
Market Cap: $268.66BAvg. Daily Volume: 46,562,40052 Week Range: $23.65 – $32.95

2. The Charles Schwab Corporation (SCHW): $14.32

Chairman Charles R. Schwab sold 4 million shares of this investment company for $13.87, generating $55.5 million from the sale. These shares were sold indirectly through a trust.

You can view the list of recent insider transactions for The Charles Schwab Corporation here.

P/E: 22.1Forward P/E: 16.65Industry P/E: 14.55
P/S: 3.99Price/Book: 2.25EV/EBITDA: N/A
Market Cap: $18.62BAvg. Daily Volume: 15,322,30052 Week Range: $10.56 – $18.6

3. Western Refining, Inc. (WNR): $18.98

Chairman of the Board, Executive Chair Paul L. Foster sold 300,000 shares of this this crude oil refining company for $18.29, generating $5.5 million from the sale. 100,000 of these shares were sold indirectly by Franklin Mountain Investments Limited Partnership.

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

P/E: 14.13Forward P/E: 6.22Industry P/E: 11.3
P/S: 0.19Price/Book: 2.02EV/EBITDA: 2.37
Market Cap: $1.69BAvg. Daily Volume: 2,567,16052 Week Range: $11.17 – $21.75

4. Bank of the Ozarks, Inc. (OZRK): $31.43

Shares of this regional bank were sold by 2 insiders:

  • Director Linda D. Gleason sold 156,400 shares for $31.24, generating $4.9 million from the sale. These shares were sold indirectly by Ms. Gleason's spouse.
  • Chief Credit Officer Darrel Russell sold 3,400 shares for $31.50, generating $107,100 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 Bank of the Ozarks, Inc. here.

P/E: 10.38Forward P/E: 14.76Industry P/E: 15.65
P/S: 4.97Price/Book: 2.44EV/EBITDA: N/A
Market Cap: $1.09BAvg. Daily Volume: 218,91052 Week Range: $19.14 – $32.26

5. Marriott International, Inc. (MAR): $39.53

Shares of this lodging company were sold by 2 insiders:

  • Chairman of the Board J. W. Marriott Jr. sold 56,000 shares for $38.30, generating $2.1 million from the sale. These shares were sold indirectly through a trust.
  • President and Managing Director of European Lodging Amy McPherson sold 51,850 shares for $38.67, generating $2 million from the sale. 36,056 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 Marriott International, Inc. here.

P/E: 68.63Forward P/E: 19.76Industry P/E: 24.29
P/S: 4.1Price/Book: N/AEV/EBITDA: 15.46
Market Cap: $13.08BAvg. Daily Volume: 3,578,18052 Week Range: $25.49 – $39.89

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

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