Insider Weekends – February 26, 2016

Welcome to edition 297 of Insider Weekends. Insider buying decreased significantly last week with insiders buying $154.2 million of stock compared to $540.45 million in the week prior. Selling on the other hand increased with insiders selling $1.06 billion of stock last week compared to $938.04 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 went up to 6.85. In other words, insiders sold almost 7 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 1.74. 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. Zillow Group, Inc. (Z): $21.01

Director Jay C. Hoag acquired 2,269,337 shares of this real estate information provider, paying $19.98 per share for a total amount of $45.33 million. These shares were purchased indirectly  through various Technology Crossover Venture (TCV) funds.

We would have normally skipped this purchase because it is a purchase by a fund but decided to make an exception 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.

Zillow’s class A shares trade under the symbol ZG while the newly issued class C shares trade under the old symbol Z. Based on the three filings that constitute this $45.33 million purchase, TCV purchased both class A and class C shares but acquired nearly 5 times as many C shares as A shares. The footnotes of all three filings indicate that the shares were sold and not purchased but that appears to be an error because both the transaction code and the number of shares owned following the transaction indicate that these were purchases.

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

2. Seattle Genetics, Inc. (SGEN): $31.01

Director Felix Baker acquired 1,315,979 shares of this biotech company, paying $29.61 per share for a total amount of $38.97 million. These shares were purchased indirectly by Baker Bros. Advisors LP.

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

3. Prospect Capital Corporation (PSEC): $7.02

Shares of this business development company were acquired by 2 insiders:

• Chief Executive Officer John F. Barry acquired 3,328,700 shares, paying $6.84 per share for a total amount of $22.78 million. Mr. Barry increased his stake by 18.77% to 21,060,598 shares with this purchase.
• Chief Operating Officer M. Grier Eliasek acquired 60,000 shares, paying $6.88 per share for a total amount of $412,650. Mr. Eliasek increased his stake by 8.73% to 747,196 shares with this purchase.

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

4. The Home Depot, Inc. (HD): $126.26

Director Gregory D. Brenneman acquired 40,000 shares of this home improvement retailer, paying $124.73 per share for a total amount of $4.99 million. Mr. Brenneman increased his stake by 631.71% to 46,332 shares with this purchase.

You can view the list of recent insider transactions for The Home Depot, Inc. here.

5. Incyte Corporation (INCY): $74.34

Director Julian Baker acquired 64,290 shares of this drug discovery and development company, paying $70.79 per share for a total amount of $4.55 million. These shares were acquired indirectly through Baker Brothers Life Sciences Capital and other related entities.

This purchase follows the large $205 million purchase we reported last week.

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

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

Notable Insider Sales:

1. Facebook, Inc. (FB): $107.92

Shares of Facebook were sold by 3 insiders:

• Director Jan Koum sold 2,030,146 shares for $106.62, generating $216.46 million from the sale. These shares were sold indirectly through a trust.
• Chief Financial Officer David M. Wehner sold 7,973 shares for $102.58, generating $817,870 from the sale.
• VP and General Counsel Colin Stretch sold 1,000 shares for $106.86, generating $106,860 from the sale.

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

2. Hasbro Inc. (HAS): $76.45

Shares of this toy company were sold by 2 insiders:

• Director Alan G. Hassenfeld sold 585,000 shares for $72.24, generating $42.26 million from the sale. These shares were sold indirectly through a trust.
• President, CEO & Chairman Brian Goldner sold 130,000 shares for $74.47, generating $9.68 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 Hasbro Inc. here.

3. Lear Corp. (LEA): $101.78

Shares of this auto parts company were sold by 10 insiders:

• President & CEO Matthew Simoncini sold 123,162 shares for $103.86, generating $12.79 million from the sale.
• EVP, Business Development & General Counsel Terrence B. Larkin sold 44,349 shares for $103.86, generating $4.61 million from the sale.
• EVP & President, Seating Raymond E. Scott sold 43,776 shares for $103.86, generating $4.55 million from the sale.
• Sr. VP and CFO Jeffrey H. Vanneste sold 32,318 shares for $103.86, generating $3.36 million from the sale.
• Sr VP, Human Resources Thomas A. Didonato sold 26,964 shares for $103.86, generating $2.8 million from the sale.
• Sr. VP & President, EPMS Frank C. Orsini sold 25,070 shares for $103.86, generating $2.6 million from the sale.
• SVP Comm, Facilities & Inv Rel Mel Stephens sold 17,146 shares for $103.86, generating $1.78 million from the sale.
• VP Treas & Chief Diversity Off Shari L. Burgess sold 9,550 shares for $103.86, generating $991,837 from the sale.
• VP, Corporate Controller & CAO James L. Murawski sold 8,167 shares for $103.86, generating $848,200 from the sale.
• President, Asia Pacific Ops Jay K. Kunkel sold 5,088 shares for $103.86, generating $528,426 from the sale.

You can view the list of recent insider transactions for Lear Corp. here.

4. O’Reilly Automotive Inc. (ORLY): $262.93

Shares of this auto parts retailer were sold by 4 insiders:

• Chairman of the Board David E. O’Reilly sold 80,000 shares for $260.03, generating $20.8 million from the sale. 60,000 of these shares were sold indirectly by the reporting person as trustee for reporting person’s children and of a GRAT, and in the Company’s 401k plan.
• EVP of Supply Chain Gregory D. Johnson sold 5,000 shares for $259.67, generating $1.29 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• Director Lawrence P. O’Reilly sold 5,000 shares for $264.00, generating $1.32 million from the sale.
• SVP of Distribution Larry Lee Ellis sold 1,000 shares for $259.00, generating $258,997 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 O’Reilly Automotive Inc. here.

5. Hawaiian Holdings Inc. (HA): $42.64

Shares of this airline company were sold by 5 insiders:

• Director Zac Hirzel sold 310,698 shares for $40.36, generating $12.54 million from the sale. These shares were sold indirectly by Hirzel Capital.
• Director Lawrence Hershfield sold 200,000 shares for $41.33, generating $8.27 million from the sale.
• EVP and CCO Peter R. Ingram sold 25,000 shares for $40.54, generating $1.01 million from the sale.
• President and CEO Mark B. Dunkerley sold 14,000 shares for $40.00, generating $560,000 from the sale.
• SVP-Human Resources Barbara Falvey sold 10,000 shares for $42.38, generating $423,750 from the sale.

You can view the list of recent insider transactions for Hawaiian Holdings 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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