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Insider Weekends – May 4, 2012

 May 06, 2012 03:08 PM
 


(By Asif Suria) Welcome to edition hundred of Insider Weekends. Insider buying increased with insiders purchasing $59 million of their stock last week compared to $7.9 million in the week prior. Selling also increased with insiders selling $1.58 billion worth of stock last week compared to $1.38 billion 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 dropped down to 26.7. In other words, insiders sold almost 27 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the week prior when the ratio stood at 174. 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.

[Related -Google Inc (GOOG): Why Nest Labs Deal Is A Wakeup Call For Apple Inc.?]

We wrote the following about the big spike in the ratio last week,

"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."

The S&P 500 registered a loss of 2.44% last week and if Friday's close is any indication, we might continue to see weakness ahead.

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. The Coca-Cola Company (KO): $77

Shares of Coca-Cola were acquired by 2 insiders:

  • Director Barry Diller acquired 264,000 shares, paying $76.98 per share for a total amount of $20.3 million. These shares were purchased indirectly through a trust.
  • Director Evan G. Greenberg acquired 6,507 shares, paying $76.75 per share for a total amount of $499,400. Mr. Greenberg increased his stake by 86.51% to 14,029 shares with this purchase.

You can view the list of recent insider transactions for The Coca-Cola Company here.

P/E: 20.47Forward P/E: 17.15Industry P/E: 16.42
P/S: 3.71Price/Book: 5.33EV/EBITDA: 14.59
Market Cap: $173.86BAvg. Daily Volume: 7,974,62052 Week Range: $63.34 – $77.82

2. Titan International Inc. (TWI): $27.56

Director Richard M. Cashin Jr. acquired 350,000 shares of this tires and wheels manufacturer, paying $28.69 per share for a total amount of $10.04 million. Mr. Cashin increased his stake by 81.45% to 779,693 shares with this purchase.

Mr. Cashin has served as an independent director of Titan since 1994 and according to his profile, he is "Managing Partner of One Equity Partners LLC, which manages multi-billion dollar investments and commitments in direct private equity transactions for JP Morgan, where he is a member of the Executive Committee."

Titan manufacturer tires, wheels and other products for agricultural, forestry, construction and off-road vehicles. The company has seen tremendous revenue and earnings growth both on a year-over-year basis as well as on a sequential quarter basis. Titan reported revenue of $1.49 billion for the full year 2011, representing growth of 68.6% when compared to revenue of $881.6 million in 2010. For the first quarter of 2012, the company reported revenue of $463.1 million, up 65% YoY and 15% over Q4 2011.

Improving margins helped the company post a 118% increase in operating income of $58.7 million. Prospects for future growth also look strong as the company is forecasting a revenue "run rate" of between $3 to $4 billion by the end of 2013. The company does have $188.6 million of debt net of cash on its balance sheet but all its debt is long-term and the balance sheet appears to be strong. Net margins of 7.65% are not very high but the margin trend has been higher. The company trades for a very reasonable forward P/E of 9.57, EV/EBITDA ratio of 6.36 and a PEG of just 0.35.

Voluntary Disclosure: I have a long position in Titan International in my personal portfolio.

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

P/E: 15.23Forward P/E: 9.57Industry P/E: 11.28
P/S: 0.74Price/Book: 2.78EV/EBITDA: 6.36
Market Cap: $1.16BAvg. Daily Volume: 726,38452 Week Range: $12.97 – $30.21

3. Akamai Technologies, Inc. (AKAM): $32.56

Chief Scientist Thomson F. Leighton acquired 100,000 shares of this internet information provider, paying $33.14 per share for a total amount of $3.3 million. These shares were purchased indirectly through a trust.

After a solid rally that saw the stock nearly double since last Fall, the stock gave back some of those gains over the last few trading session, dropping from $38.75 to current levels. While Q1 2012 revenue of $319 million grew 16% year-over-year and came in better than expected, earnings of 41 cents per share were down 15% on account of taxes and acquisition costs. Second quarter earnings guidance of 36 to 38 cents was also below expectations of 39 cents per share.

The company has managed to maintain its margins and grow the top line despite strong competition from companies like Level 3 Communications (LVLT). With an exceptionally strong balance sheet and the stock trading at 10.9 times EBITDA, the company is worth keeping on your radar.

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

P/E: 30.98Forward P/E: 17.51Industry P/E: 31.01
P/S: 4.96Price/Book: 2.71EV/EBITDA: 10.87
Market Cap: $5.83BAvg. Daily Volume: 3,580,55052 Week Range: $18.25 – $39.14

4. Hess Corporation (HES): $50.94

Shares of this integrated energy company were acquired by 2 insiders:

  • Chairman of the Board and CEO John B. Hess acquired 48,000 shares, paying $52.00 per share for a total amount of $2.5 million. Mr. Hess increased his stake by 16.82% to 333,435 shares with this purchase.
  • Director John H. Mullin III acquired 10,000 shares, paying $53.63 per share for a total amount of $536,257. Mr. Mullin increased his stake by 37.34% to 36,781 shares with this purchase.

We wrote about Hess in January following a large $4.9 million insider purchase by the CEO and followed that up with a weekly focus article that you can read here. The stock was trading at $60.38 back then and we decided to add the company to our watch list instead of starting a position, primarily on account of some near-term challenges the company currently faces as discussed in the article.

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

P/E: 13.15Forward P/E: 6.56Industry P/E: N/A
P/S: 0.47Price/Book: 0.93EV/EBITDA: 4.01
Market Cap: $17.33BAvg. Daily Volume: 4,635,84052 Week Range: $46.66 – $80.29

5. Opko Health, Inc. (OPK): $4.47

CEO & Chairman Phillip Frost M.D. acquired 257,000 shares of this medical devices and drug development company, paying $4.75 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.

P/E: N/AForward P/E: N/AIndustry P/E: 21.96
P/S: 47.88Price/Book: 8.33EV/EBITDA: -64.89
Market Cap: $1.32BAvg. Daily Volume: 1,808,49052 Week Range: $3.15 – $5.85

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

Notable Insider Sales:

1. Microsoft Corporation (MSFT): $30.98

Shares of Microsoft were sold by 2 insiders:

  • Founder Bill Gates sold 8 million shares for $32.07, generating $256.5 million from the sale.
  • Chief Accounting Officer Frank H. Brod sold 5,000 shares for $32.01, generating $160,025 from the sale.

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

P/E: 11.35Forward P/E: 10.19Industry P/E: 30
P/S: 3.65Price/Book: 3.89EV/EBITDA: 7.01
Market Cap: $260.26BAvg. Daily Volume: 45,660,50052 Week Range: $23.65 – $32.95

2. Apple Inc. (AAPL): $565.25

Shares of Apple were sold by 2 insiders:

  • Senior Vice President Scott J. Forstall sold 64,151 shares for $603.77, generating $38.7 million from the sale.
  • Director Millard S. Drexler sold 40,000 shares for $603.52, generating $24.1 million 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 Apple Inc. here.

P/E: 13.77Forward P/E: 10.48Industry P/E: 14.23
P/S: 3.82Price/Book: 5.31EV/EBITDA: 9.39
Market Cap: $528.54BAvg. Daily Volume: 24,811,20052 Week Range: $310.5 – $644

3. Regeneron Pharmaceuticals, Inc. (REGN): $131.4

Shares of this biotech company were sold by 5 insiders:

  • President & CEO Leonard S. Schleifer sold 100,000 shares for $134.83, generating $13.5 million from the sale.
  • Chief Scientific Officer and President, Regeneron Research Laboratories George Yancopoulos sold 33,165 shares for $134.83, generating $4.5 million from the sale.
  • SVP Finance and CFO Murray A. Goldberg sold 31,587 shares for $135.40, generating $4.3 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • SVP & General Manager Industrial Operations Daniel Van Plew sold 14,442 shares for $136.38, generating $1.97 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • VP Strategy and Investor Relatations Michael S. Aberman sold 6,162 shares for $134.81, generating $830,683 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 Regeneron Pharmaceuticals, Inc. here.

P/E: N/AForward P/E: 49.58Industry P/E: 16.67
P/S: 22.13Price/Book: 24.83EV/EBITDA: -112.26
Market Cap: $12.28BAvg. Daily Volume: 1,049,77052 Week Range: $42.83 – $145.04

4. Toll Brothers Inc. (TOL): $25.7

Shares of this luxury home builder were sold by 2 insiders:

  • Executive Chairman Robert I. Toll sold 938,183 shares for $26.41, generating $24.8 million from the sale. These shares were sold indirectly through a GRAT.
  • Chief Accounting Officer Joseph R. Sicree sold 7,200 shares for $26.75, generating $192,600 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 Toll Brothers Inc. here.

P/E: 127.86Forward P/E: 33.38Industry P/E: N/A
P/S: 2.99Price/Book: 1.68EV/EBITDA: 49.71
Market Cap: $4.28BAvg. Daily Volume: 3,462,96052 Week Range: $13.16 – $27.02

5. Stericycle, Inc. (SRCL): $84.62

Shares of this medical waste management company were sold by 3 insiders:

  • Chairman & CEO Mark C. Miller sold 199,293 shares for $87.46, generating $17.4 million from the sale. These shares were sold indirectly through a trust.
  • CFO Frank J.M. ten Brink sold 774 shares for $87.91, generating $68,044 from the sale.
  • EVP & COO Richard T. Kogler sold 773 shares for $87.91, generating $67,956 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 Stericycle, Inc. here.

P/E: 30.22Forward P/E: 23.12Industry P/E: 16.91
P/S: 4.23Price/Book: 5.66EV/EBITDA: 16.2
Market Cap: $7.19BAvg. Daily Volume: 390,01452 Week Range: $73.05 – $93.95

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

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