Insider Weekends – November 26, 2010

  • November 27, 2010

Welcome to edition twenty five of Insider Weekends. Insider buying decreased significantly last week with insiders purchasing $9.17 million of their stock when compared to $25.73 million in the week prior. Selling also decreased with insiders selling $1.38 billion worth of stock when compared to $2.37 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 buying in that week. The adjusted ratio for last week went up to 150.77. In other words, insiders sold almost 151 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the week prior when the ratio stood at 92. 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.

Insider Sell Buy Ratio November 26, 2010
Insider Sell Buy Ratio November 26, 2010

Note: As mentioned in the first post in this series Introduction to Insider Weekends, 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. Citigroup, Inc. (C): $4.11

CEO, Consumer Banking Americas, Manuel Medina-Mora acquired 542,198 shares of this global financial services company, paying $4.3 per share for a total amount of $2.3 million. Mr Mora increased his stake by 7.76% to 7,530,850 shares with this purchase.

Some of these purchases were executed on the Mexican Stock Exchange. Mr Medina-Mora was promoted to his current position in January and is considered a candidate who could succeed Vikram Pandit.

P/E: 76.11Forward P/E: 8.93Industry P/E: 11.14
P/S: 2.35Price/Book: 0.74EV/EBITDA: N/A
Market Cap: $119.40BAvg. Daily Volume: 464,971,00052 Week Range: $3.11 – $5.07

2. Inland Real Estate Corp. (IRC): $8.6

Shares of this real estate investment trust (REIT), were purchased by two insiders:

  • Director Daniel Goodwin acquired 59,474 shares, paying an average of $8.37 per share for a total amount of $497,589. Mr Goodwin increased his stake by 0.54% to 10,997,929
  • President & CEO Mark Zalatoris acquired 1,004 shares, paying $8.37 per share for a total amount of $8,401. Mr Zalatoris increased his stake by 1.27% to 80,000 shares with this purchase

We have mentioned Inland numerous times in November following a string of purchases by Director Goodwin. It is good to see the CEO participating in the purchasing but the amount of shares purchased do not signal strong conviction.

P/E: 477.78Forward P/E: 10.62Industry P/E: 38.49
P/S: 4.5Price/Book: 1.87EV/EBITDA: 16.86
Market Cap: $748.88MAvg. Daily Volume: 370,40252 Week Range: $7.17 – $10.29

3. Buckeye Technologies Inc. (BKI): $19.87

Sr VP Specialty Fibres Douglas Dowdell acquired 26,394 shares of this company that makes cellulose-based specialty products made from wood and cotton, paying $18.83 per share for a total amount of $496,991.

Mr. Dowdell acquired these shares indirectly in a retirement account. The stock has more than doubled since July. The CFO and CEO both purchased small amounts of shares in June in the $10 to $11 range. A director also purchased 3,500 shares last week. Most of the other insider transactions have been sales since the start of the year.

P/E: 5.69Forward P/E: 10.19Industry P/E: 11.61
P/S: 1.01Price/Book: 1.54EV/EBITDA: 5.33
Market Cap: $784.71MAvg. Daily Volume: 305,61552 Week Range: $8.91 – $20.25

4. MRV Communications Inc. (MRVC.PK): $1.6

Shares of this telecommunications equipment provider were purchased by two insiders:

  • Director Charles Gillman acquired 183,271 shares, paying $1.4 per share for a total amount of $256,575. Mr Gillman increased his stake by 5.71% to 3,393,552 shares with this purchase
  • Director Kenneth Shubin Stein acquired 150,000 shares, paying $1.4 per share for a total amount of $208,900. Mr. Stein increased his stake by 46.59% to 471,928 shares with this purchase. These shares were purchased both directly and indirectly through managed accounts of Spencer Capital Management.

I mentioned MRV Communications in the July 18 Insider Weekends post stating, “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.”

P/E: 9.3Forward P/E: 11.43Industry P/E: N/A
P/S: 0.51Price/Book: 1.4EV/EBITDA: 7.51
Market Cap: $252.37MAvg. Daily Volume: 309,13452 Week Range: $0.21 – $1.53

5. LSI Corporation (LSI): $5.8

Shares of this semiconductor company were purchased by two insiders:

  • Director Gregorio Reyes acquired 50,000 shares, paying $5.48 per share for a total amount of $273,995. Mr Reyes increased his stake by 52.63% to 145,000 shares with this purchase. This purchase was done indirectly through a partnership.
  • Director Michael Strachan acquired 10,000 shares, paying $5.67 per share for a total amount of $56,692. Mr Strachan increased his stake by 25% to 50,000 shares with this purchase.
P/E: 32.04Forward P/E: 11.6Industry P/E: 17.35
P/S: 1.4Price/Book: 2.58EV/EBITDA: 8.05
Market Cap: $3.58BAvg. Daily Volume: 6,433,52052 Week Range: $3.89 – $6.73

Notable Insider Sales:

1. Microsoft Corporation (MSFT): $25.25

Shares of Microsoft were sold by two insiders:

  • Chief Executive Officer Steven Ballmer sold 8.14 million shares for $25.46 per share, generating a total amount of $207.32 million
  • Director William H Gates III sold 2 million shares for $25.87 per share, generating a total amount of $51.73 million
P/E: 10.86Forward P/E: 9.42Industry P/E: 26.48
P/S: 3.3Price/Book: 4.63EV/EBITDA: 6.17
Market Cap: $216.03BAvg. Daily Volume: 61,622,10052 Week Range: $22.73 – $31.58

2. Syntel, Inc. (SYNT): $48.14

Chairman Bharat Desai sold 2.61 million shares of this information technology services provider for $47.5 per share, generating a total amount of $123.98 million.

P/E: 16.73Forward P/E: 16.6Industry P/E: 16.7
P/S: 3.95Price/Book: 4.48EV/EBITDA: 12.08
Market Cap: $2.01BAvg. Daily Volume: 163,59752 Week Range: $30.79 – $53.37

3. Oracle Corp. (ORCL): $27.49

Chief Executive Officer Lawrence Joseph Ellison sold 3 million shares of this application software company for $27.7 per share, generating a total amount of $83.09 million.

P/E: 21.94Forward P/E: 12.5Industry P/E: 26.48
P/S: 4.76Price/Book: 4.34EV/EBITDA: 11.04
Market Cap: $138.20BAvg. Daily Volume: 38,100,90052 Week Range: $21.24 – $29.82

4. Silgan Holdings Inc. (SLGN): $34.61

Shares of this packaging & containers company were sold by two insiders:

  • Director Greg Horrigan sold 799,086 shares for 34.75 per share, generating a total amount of $27.7 million
  • Director Philip Silver sold 579,573 shares for $34.75 per share, generating a total amount of $20.14 million
P/E: 17.57Forward P/E: 13.57Industry P/E: 13.56
P/S: 0.87Price/Book: 3.34EV/EBITDA: 7.63
Market Cap: $2.66BAvg. Daily Volume: 476,39452 Week Range: $25.825 – $34.99

5. Intuit Inc. (INTU): $45.55

Shares of this application software company were sold by four insiders:

  • Chairman Scott Cook sold 300,000 shares for $44.52 per share, generating a total amount of $13.36 million
  • SVP, Intuit Financial Services Sasan Goodarzi sold 239,245 shares for $44.94 per share, generating a total amount of $10.75 million. A majority of this sale was as a result of exercising options immediately prior to the sale.
  • EVP, Small Business Group Kiran Patel sold 100,000 shares for $44.43 per share, generating a total amount of $4.4 million. This sale was as a result of exercising options immediately prior to the sale.
  • CEO & President Brad Smith sold 50,000 shares for $45.02 per share, generating a total amount of $2.25 million. This sale was as a result of exercising options immediately prior to the sale.
P/E: 25.79Forward P/E: 16.62Industry P/E: 26.48
P/S: 4.2Price/Book: 5.08EV/EBITDA: 12.4
Market Cap: $14.46BAvg. Daily Volume: 3,852,09052 Week Range: $28.85 – $48.94

Voluntary Disclosure: I hold a long position in LSI