Insider Weekends – September 03, 2010

  • September 5, 2010

Welcome to edition thirteen of Insider Weekends. Insider buying decreased last week with insiders purchasing $20.55 million of their stock when compared to $31.62 million in the week prior. Selling also decreased with insiders selling $364.14 million worth of stock when compared to $395.72 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 buying in that week. The adjusted ratio for last week went up to 17.72. In other words, insiders sold almost 18 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the week prior when the ratio stood at 12.51. 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.

Sell Buy Ratio September 3 2010

Notable Insider Buys:

1. Cherokee Inc. (CHKE): $18.15

Chief Executive Officer Henry Stupp acquired 81,967 shares of this apparel company, paying $18.3 per share for a total amount of $1.5 million. Mr. Stupp was appointed CEO of Cherokee last week and it looks  like the market did not receive him enthusiastically, with the stock dropping nearly 7% on the day of his appointment.

Mr. Stupp has been awarded 300,000 options at $18.30 that have a six year term and will vest annually in 5 installments. Half of the shares will vest only if Stupp buys an additional $1 million in shares by Jan. 31.

P/E: 13.74Forward P/E: 10.8Industry P/E: 6.14
P/S: 4.89Price/Book: 8.35EV/EBITDA: 7.12
Market Cap: $159.97MAvg. Daily Volume: 60,47052 Week Range: $15.68 – $24.43

2. Entercom Communications Corp. (ETM): $7.3

Chairman Joseph field acquired 228,500 shares of this radio broadcasting company, paying $5.53 per share for a total amount of $1.3 million.

On August 30, when I sent out the nightly update on insider purchases to special reports subscribers, I wrote,

“This is by far the most interesting purchase of the day. Valuation of Entercom looks attractive and the stock has suffered a very steep sell-off from the $16 level in May to its current $5.35. The last time Mr. Field purchased stock was back at the height of the financial crisis when he picked up Entercom stock for around $1 and watched it soar to $16. Between January and April 2009, Mr. Field and his son David Field (the CEO of the company) picked up nearly $1 million of Entercom stock.

While Entercom is a profitable company with admirable margins, it labors under a debt load of $714 million. I dug through their annual report to learn that the $708 million in intangible assets listed on their balance sheet are broadcast licenses.”

The stock is up more than 30% this week following these insider purchases.

P/E: 4.54Forward P/E: 5.84Industry P/E: 0.42
P/S: 0.63Price/Book: 1.76EV/EBITDA: 9.58
Market Cap: $260.76MAvg. Daily Volume: 345,46552 Week Range: $4.39 – $16

3. SCANA Corp. (SCG): $40.56

Chairman, President & CEO William Timmerman acquired 29,190 shares of this diversified South Carolina based utilities company, paying $38.94 per share for a total amount of $1.14 million.

This purchase has boosted CEO Timmerman’s position by almost 70% to 70,985 shares held directly without taking into account another 37,195 shares he holds through a 401(k) plan.

The company owns more than 500 miles of fiber optic cable directly and operates data centre facilities. While the dividend yield of 4.7% is attractive, valuation and the $5 billion in debt SCANA has on its balance sheet does not make this company a screaming buy for me.

P/E: 13.97Forward P/E: 12.6Industry P/E: 2.58
P/S: 1.16Price/Book: 1.43EV/EBITDA: 9.52
Market Cap: $5.14BAvg. Daily Volume: 878,35952 Week Range: $33.59 – $40.57

4. German American Bancorp Inc. (GABC): $16.52

Director Thomas Seger acquired 51,042 shares of this regional bank, paying $15.5 per share for a total amount of $791,151.

Mr. Seger was appointed to the board of this regional bank two weeks ago. I would not read too much into this purchase as new directors often purchase stock in the companies they are appointed to.

P/E: 13.91Forward P/E: 13.77Industry P/E: 2.1
P/S: 3.13Price/Book: 1.51EV/EBITDA: N/A
Market Cap: $183.44MAvg. Daily Volume: 16,06252 Week Range: $14.18 – $17.31

5. Imergent Inc. (IIG): $4.1399

Chief Executive officer Steven Mihaylo acquired 162,000 shares of this e-services company, paying $3.75 per share for a total amount of $608,080.

Along with Julia Gouw of East West Bancorp (EWBC), this is another executive I see consistently buying shares of his company. Mr. Mihaylo has purchased $1.96 million worth of Imergent stock since the start of this year as reported on 25 SEC filings.

P/E: 31.6Forward P/E: N/AIndustry P/E: N/A
P/S: 0.62Price/Book: 1.66EV/EBITDA: -27.02
Market Cap: $47.20MAvg. Daily Volume: 46,70952 Week Range: $3.16 – $8.3

Notable Insider Sales:

It was interesting to see that three out of the five notable sales for this week were by insiders of real estate investment trusts (REITs). Full Disclosure: I am short the apartment REIT AIMCO (AIV).

1. Macerich Co. (MAC): $44

Shares of this retail REIT were sold by two insiders:

  • Chairman & CEO Arthur Coppola sold 252,275 shares at $43.68 per share, generating $11.02 million
  • Senior EVP, Treasurer & CFO Thomas O Hern sold 9,500 shares at $43.15 per share, generating $409,925
P/E: 52.01Forward P/E: 15.6Industry P/E: -1.9
P/S: 6.86Price/Book: 1.92EV/EBITDA: 20.1
Market Cap: $5.72BAvg. Daily Volume: 1,627,35052 Week Range: $25.35 – $47.19

2. Equity Residential (EQR): $48.86

Shares of this apartment REIT were sold by two insiders:

  • Executive Vice President Frederick Tuomi sold 60,245 shares at $47.27 per share, generating $2.85 million
  • EVP & General Counsel Bruce Strohm sold 8,296 shares at $47.84 per share, generating $396,892

12,000 of Mr. Tuomi’s shares were sold directly, while the rest were sold as a result of excercising options. Other insiders at EQR also sold stock last week but those were options related sales.

P/E: 58.51Forward P/E: 20.97Industry P/E: 2.49
P/S: 6.89Price/Book: 2.92EV/EBITDA: 20.81
Market Cap: $13.85BAvg. Daily Volume: 3,085,09052 Week Range: $25.88 – $49.02

3. The GEO Group, Inc. (GEO): $22.88

Shares of this correction and detention centers operator were sold by six insiders:

  • President and COO Wayne Calabrese sold 388,959 shares at $22.59 per share, generating $8.8 million
  • Chairman & CEO George Zoley sold 6,670 shares at $22.59 per share, generating $150,675
  • Director Anne Foreman sold 750 shares at $22.59 per share, generating $16,943
  • VP, Chief Accounting Officer Brian Evans sold 546 shares at $22.59 per share, generating $12,334
  • VP Business Development Ron Maddux sold 448 shares at $22.6 per share, generating $10,126
  • SVP – Project Development Thomas Wierdsma sold 396 shares at $22.59 per share, generating $8,946

On August 26, President and COO, Wayne Calabrese announced that he would retire at the end of this year after more than 21 years at the company. Six days later he turned around and sold his entire $8.79 million stake in the company. The sale price of $22.59 for all the transactions is odd and made it look like the sales were part of an equity offering but I did not find any information about an equity offering or why all the sales prices are the same.

P/E: 16.9Forward P/E: 13.95Industry P/E: 0.97
P/S: 0.94Price/Book: 1.75EV/EBITDA: 9.43
Market Cap: $1.12BAvg. Daily Volume: 596,99852 Week Range: $17.84 – $23.18

4. Aruba Networks, Inc. (ARUN): $19.49

Shares of this networking company were sold by three insiders:

  • Chief Technology Officer Keerti Melkote sold 450,000 shares at $18.99 per share, generating $8.55 million
  • Chief Financial Officer Steffan Tomlinson sold 44,333 shares at $18.17 per share, generating $805,575
  • Director Bernard Guidon sold 2,000 shares at $18.77 per share, generating $37,542

CTO Melkote’s sales are part of the Rule 10b5-1 scheduled trading plan adopted on 12/2/2009. However it is worth noting that the last two sales by Mr. Melkote under this plan were for 75,000 shares each. This time around he sold 450,000 shares. CFO Tomlinson and Director Guidon’s sales was also part of scheduled trading plans.

P/E: N/AForward P/E: 29.98Industry P/E: 1.44
P/S: 6.61Price/Book: 11.7EV/EBITDA: -1.18
Market Cap: $1.82BAvg. Daily Volume: 1,933,35052 Week Range: $7.44 – $19.56

5. Vornado Realty Trust (VNO): $87.41

Shares of this office and retail REIT were sold by two insiders:

  • Director Russell B Wight Jr. sold 70,000 shares at $85.17  per share, generating $5.96 million
  • EVP – Retail Division Sandeep Mathrani sold 29,709 shares at $83.21  per share, generating $2.47 million
P/E: 68.45Forward P/E: 16.34Industry P/E: 1.6
P/S: 5.53Price/Book: 2.9EV/EBITDA: 18.58
Market Cap: $15.93BAvg. Daily Volume: 1,629,27052 Week Range: $53.24 – $87.53

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Contributing Author: Ann Kumar