Insider Weekends – January 14, 2011

Welcome to edition thirty two of Insider Weekends. Insider buying dropped last week with insiders purchasing $7.96 million of their stock when compared to $18.31 million in the week prior. Selling also dropped with insiders selling $398.38 million worth of stock when compared to $591.21 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 increased to 50.01. In other words, insiders sold more than 50 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the week prior when the ratio stood at 32.28. 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 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. Magnum Hunter Resources Corp. (MHR): $7.97

Director Joe L. McClaugherty acquired 44,200 shares of this oil & gas company, paying $5.90 per share for a total amount of $260,580. Mr. McClaugherty increased his stake by 8.78% to 547,380 shares with this purchase.

This appears to be a  late filing as the transactions took place on Dec 6th and 7th. That did not stop investors from bidding the stock up 8.88% last Friday.

2. Cogent Communications Group Inc. (CCOI): $15.17

Director Erel N. Margalit acquired 8,700 shares of this ISP and communication services company, paying $14.18 per share for a total amount of $123,366. Mr. Margalit increased his stake by 33.46% to 34,700 shares with this purchase.

This is the fifth director that has purchased shares over the last week.

3. HB Fuller Co. (FUL): $22.4

CFO James R. Giertz acquired 5,000 shares of this specialty chemicals company, paying $22.48 per share for a total amount of $112,422. Mr. Giertz increased his stake by 12.67% to 44,458 shares with this purchase.

4. Conolog Corp. (CNLG): $0.4395

Chairman, CEO & CFO Robert S. Benou acquired 277,777 shares of this diversified electronics company, paying $0.36 per share for a total amount of $100,000. Mr. Benou increased his stake by 65.10% to 704,443 shares with this purchase. These shares were acquired through a Private Placement transaction with Conolog Corporation.

5. First Citizens Bancshares Inc. (FCNCA): $195.5

Executive Vice Chairman Frank B Holding acquired 275 shares of this Raleigh, North Carolina bank holding company, paying $192.30 per share for a total amount of $52,882.

When I last wrote about First Citizens back on October 1st, I mentioned,

“Mr. Holding has been buying shares of this regional bank for several months now but in small quantities. First Citizens BancShares is a holding company for First-Citizens Bank & Trust Company and IronStone Bank. The holding company trades just above book value and has a small dividend yield of just 0.7%. First-Citizens Bank & Trust Company has a low Troubled Asset Ratio (TAR) of 10.5 when compared to the national median of 15. IronStone Bank has a TAR of 15.2. Assets have grown at both banks year-over-year but more significantly at First-Citizens Bank & Trust Company, which now has over $18 billion in assets.”

His purchases have continued since then and the TAR for First Citizens bank has held steady at 10.5 while the TAR for IronStone Bank jumped up to 18.1 when compared to the national median of 15.1 as of Q3 2010. The stock trades for 1.27 times tangible book value and I plan to keep this bank on my radar.

You can view a list of all the purchases from this Insider Buying page on our newly launched site InsideArbitrage.com.

Notable Insider Sales:

1. Hewlett-Packard Company (HPQ): $46.25

Shares of this computer products and services company were sold  by 6 insiders:

• EVP, EB Ann M. Livermore sold 175,000 shares for $45.99, generating $8.05 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• EVP, IPG Vyomesh Joshi sold 125,000 shares for $44.98, generating $5.62 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• EVP, PSG Richard Todd Bradley sold 77,270 shares for $45, generating $3.48 million from the sale. 15,000 of these shares were sold as a result of exercising options immediately prior to the sale.
• EVP & CTO, Shane Robinson sold 54,542 shares for $45, generating $2.45 million from the sale.
• EVP & CFO Catherine Lesjak sold 15,000 shares for $46, generating $690,000 from the sale. These shares were sold indirectly through a joint account with her spouse.
• SVP & Controller James T. Murrin sold 6,000 shares for $45, generating $270,000 from the sale.

All of these sales were pursuant to Rule 10b5-1 trading plans adopted by the reporting people.

2. Toll Brothers Inc. (TOL): $20.9

Executive Chairman Robert Toll sold 500,000 shares of this home building company for an average price of $20.47, generating $10.23 million from the sale. Mr. Toll also gifted 94,044 shares to a very lucky person on December 30, 2010.

3. Lululemon Athletica Inc. (LULU): $71.81

Chief Innovation and Branding officer Dennis Wilson (father of founder Chip Wilson) sold 100,000 shares of this yoga and athletic apparel retailer for $72.78 per share, generating $7.28 million from the sale.

These shares were obtained on conversion of exchangeable shares of Lulu Canadian Holding, Inc. for shares of Lululemon Athletica, Inc. The sales were effected pursuant to a Rule 10b5-1 trading plan adopted on June 14, 2010.

4. Dish Network Corp. (DISH): $21.41

Executive Vice President James DeFranco sold 290,000 shares of this satellite television provider at an average price of $20.93, generating $6.08 million from the sale.

These sales were effected pursuant to a Rule 10b5-1 trading plan. 200,000 of these shares were sold indirectly through a limited partnership where Mr. DeFranco is a general partner.

5. Monsanto Co. (MON): $74.33

Shares of this agriculture products company were sold by 2 insiders:

• EVP and Chief Technology Officer, Robert Fraley sold 46,740 shares for an average price of $73.50, generating $3.43 million from the sale. 26,740 of these shares were sold as a result of exercising options immediately prior to the sale. The sales were effected pursuant to a Rule 10b5-1 trading plan.
• EVP and General Counsel David Snively sold 30,346 shares for $72.28, generating $2.19 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.

You can view a list of all sales from this Insider Sales page on our newly launched site InsideArbitrage.com.