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Insider Weekends – June 18, 2010

  • June 20, 2010

Welcome to the second edition of Insider Weekends and thank you for your positive feedback after reading the Introduction to Insider Weekends.

Sell/Buy Ratio:

The insider Sell/Buy ratio is calculated by dividing the total insider sales in a given week by total insider buying in that week. The adjusted ratio for last week was 30.11. In other words, insiders sold more than 30 times as much stock as they purchased. This is significantly higher than the 9.41 ratio from the week prior but still well below the high of 68 in the last week of April. We are calculating an adjusted ratio by removing transactions by funds and trying as best as possible only to retain information about insiders and 10% owners who are not funds.

I also removed two sets of transactions, one on the buy side and one on the sell side that were significantly skewing the ratio last week. The transaction on the buy side I removed was the purchase of 15.59 million shares of Lions Gate Entertainment (LGF) by famous investor Carl Icahn through his tender offer of $7/share. Mr. Icahn spent $109.15 million acquiring these shares and bumping up his total stake in Lions Gate to 32%. The transaction on the sell side I removed was the sale of 19.63 million shares of Ulta Salon (ULTA) through an offering by its CEO and other directors that generated $419.39 million. One could argue that while Mr. Icahn is neither a founder of Lions Gate nor part of the management team, taking out that buy transaction makes sense but the sale by the insiders of Ulta Salon should be retained. Not removing the Ulta transaction bumps the ratio up to 48.52.

Notable Insider Buys Last Week:

1. Saul Centers (BFS) $41.89

Chairman and CEO Francis Saul II once again acquired 94,306 shares of this shopping and office REIT paying $3.975 million at an average purchase price of $41.96. Over the last 13 weeks he has purchased over $23 million of Saul Centers stock.

Key Statistics:

P/E: 33.70Forward P/E: 16.76Industry P/E: 28.76
P/S: 4.76Price/Book: 15.55EV/EBITDA: 13.46
Market Cap: 763.78 millionDaily Volume: 62,83452 Week Range: $27.56 – $44.65

2. DuPont Fabros Technology (DFT) $26.40

Director Mark Amin acquired 84,332 shares of this Washington DC based data center REIT paying $2.16 million at a purchase price of $25.65. Even with a recent 50% increase in the dividend, the dividend yield is now just 1.9% and not very attractive for a REIT.

Key Statistics:

P/E: 347.37Forward P/E: 26.67Industry P/E: 28.60
P/S: 5.26Price/Book: 2.05EV/EBITDA: 19.61
Market Cap: $1.15 billionDaily Volume: 2,401,49452 Week Range: $8.25 – $28.19

3. MRV Communications (MRVC.PK) $1.41

Director Charles Gillman acquired 1,308,722 shares of this telecommunications equipment provider paying $1.82 million at a purchase price of $1.39 per share. Director Kenneth Shubin Stein also acquired 100,000 shares paying $129,430 at a purchase price of $1.29. Dr. Kenneth Shubin Stein, MD, CFA also happens to be the founder of the deep-value fund Spencer Capital Management and teaches as an adjunct professor at the Columbia University Graduate School of Business. Charles Gillman is Senior Managing Member at value oriented hedge fund Boston Avenue Capital.

Key Statistics:

P/E: 11.95Forward P/E: N/AIndustry P/E: N/A
P/S: 0.46Price/Book: 1.22EV/EBITDA: 9.39
Market Cap: 222.33 millionDaily Volume: 1,961,24752 Week Range: $0.35 – $1.60

4. Quidel (QDEL) $12.35

A number of insiders including the CEO, CFO and three directors acquired 130,525 shares of this San Diego based diagnostic testing solutions company  paying $1.4 million at an average purchase price of $10.75 (transactions range from $10.61 to $11.25).

Key Statistics:

P/E: 11.09Forward P/E: 17.15Industry P/E: 17.86
P/S: 2.02Price/Book: 2.92EV/EBITDA: 6.64
Market Cap: 356.69 millionDaily Volume: 387,27152 Week Range: $10.48 – $18.81

5. NCI Building Systems (NCS) $9.85

A number of insiders including the CEO, CFO and two directors acquired 102,630 shares of this construction metal products company paying $883,720 at an average purchase price of $8.61 (transactions range from $8.56 to 9.39). CEO Norman Chambers acquired a bulk of these shares purchasing 95,516 shares and increasing his holdings by 39%.

Key Statistics:

P/E: NAForward P/E: NAIndustry P/E: 25.15
P/S: 0.2Price/Book: 5.72EV/EBITDA: 18.78
Market Cap: 178.15 millionDaily Volume: 468,08552 Week Range: $8 – $25.60

Another insider purchase worth noting is the purchase of 43,260 shares of Hornbeck Offshore Services (HOS) by father-son team Larry Hornbeck and Todd Hornbeck. HOS is a 1,300 employee Louisiana based company that provides transportation and logistics services to the offshore drilling industry through offshore supply vessels, tugs and barges. Larry, the original founder of the business is now a director and son Todd is currently President and CEO.

Larry purchased 22,500 shares at an average price of $14.36 and Todd purchased 20,760 shares at an average price of $14.40. The stock closed Friday at $14.98, up 4.46%. According to this Barron’s article, less than 25% of the company’s offshore contract coverage in the second half of the year is for drilling in the Gulf of Mexico and just 6% in 2011. Five of its 55 vessels were also involved in relief efforts. The company  has filed a lawsuit against the federal government seeking to nullify the six month ban on deep water drilling in the Gulf of Mexico. The stock is off 39% from its April 30 high of $24.47 following the BP oil disaster.

Notable Insider Sales Last Week:

1. The Home Depot (HD) $31.94

Director David Batchelder sold 4.08 million shares of this home improvement retailer company generating $131.2 million at an average selling price of $32.17

Key Statistics:

P/E: 18.81Forward P/E: 14.01Industry P/E: 18.81
P/S: 0.80Price/Book: 2.78EV/EBITDA: 9.06
Market Cap: 53.67 billionDaily Volume: 19,786,01352 Week Range: $22.27 – $37.03

2. Mercadolibre (MELI) $59.23

Director Anton Levy sold 700,956 shares of this Argentinian e-commerce and payments provider generating $40.67 million at an average selling price of $58.03. CFO Kazah Hernan sold 20,000 shares generating $1.2 million at a selling price of $59.06 and Senior VP of Payments Gimenez Osvaldo sold 5,000 shares generating $290,750 at a selling price of $58.15.

Key Statistics:

P/E: 69.85Forward P/E: 39.49Industry P/E: 22.81
P/S: 14.38Price/Book: 21.75EV/EBITDA: 36.57
Market Cap: 2.61 billionDaily Volume: 986,21852 Week Range: $21.20 – $62.14

3. Fidelity National Information Services (FIS) $27.48

Executive Chairman William Foley II sold 750,000 shares of FIS generating $20.75 million at an average selling price of $27.67. This transaction reduced his holdings by 29%.

Key Statistics:

P/E: 47.3Forward P/E: 12.16Industry P/E: 23.3
P/S: 2.48Price/Book: 1.25EV/EBITDA: 12.59
Market Cap: 10.35 billionDaily Volume: 5,175,62052 Week Range: $19.16 – $30.78

4. Plains All American Pipeline (PAA) $58.47

Director Gary Petersen sold 328,200 shares or 98% of his holdings of this oil and natural gas pipeline company generating $19.15 million at an average selling price of $58.35.

Key Statistics:

P/E: 21.35Forward P/E: 19.49Industry P/E: 18.85
P/S: 0.37Price/Book: 1.98EV/EBITDA: 13.43
Market Cap: 7.96 billionDaily Volume: 397,43452 Week Range: $40.01 – $60.06

5. United Natural Foods (FIS) $32.79

Several Directors and a regional President sold 231,805 shares of this natural and organic food company generating $7.65 million. Transaction prices ranged from $32.53 to $33.65.

Key Statistics:

P/E: 21.43Forward P/E: 18.22Industry P/E: 12.29
P/S: 0.4Price/Book: 2.37EV/EBITDA: 12.00
Market Cap: 1.42 billionDaily Volume: 302,75452 Week Range: $23.03 – $34.25

Voluntary Disclosure:
I own shares of Lions Gate Entertainment (LGF) and Quidel (QDEL).