Insider Weekends – January 21, 2011

Welcome to edition thirty three of Insider Weekends. Insider buying increased last week with insiders purchasing $10.15 million of their stock when compared to $7.96 million in the week prior. Selling also increased with insiders selling $503.16 million worth of stock when compared to $398.38 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 declined slightly to 49.56. In other words, insiders sold almost 50 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the week prior when the ratio stood at 50.01. 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. MSCI Inc. (MSCI): $35.5

Chairman, CEO and President Henry A. Fernandez acquired 6,255 shares of this application software company, paying $35.40 per share for a total amount of $221,427.

These shares were purchased indirectly by Mr. Fernandez’s son and daughter.

2. Opko Health, Inc. (OPK): $3.48

CEO & Chairman Phillip Frost M.D. acquired 32,500 shares of this medical appliances & equipment company, paying $3.74 per share for a total amount of $121,479.

These shares were acquired indirectly through Frost Gamma Investments Trust, of which Phillip Frost M.D., is the trustee.

3. Winmark Corp. (WINA): $33

Chairman & CEO John L. Morgan acquired 3,600 shares of this retail franchise company, paying $33.11 per share for a total amount of $119,196. Mr. Morgan increased his stake by 0.22% to 1,634,659 shares with this purchase.

We last wrote about Winmark, parent of Play It Again Sports and other retail franchises, on January 6 following an indirect purchase by Mr. Morgan’s son when we said,

“Three insiders have purchased shares in the last two weeks. The company sports some of the best operating margins in retail approaching 40% and is steadily growing both the top and bottom line. The stock is trading very close to its 52 week high and valuation is a little high but that is to be expected for a highly profitable growing company.”

4. Tiffany & Co. (TIF): $57.83

Director Lawrence K. Fish acquired 1,000 shares of this luxury jewelry company, paying $60.28 per share for a total amount of $60,279. Mr. Fish increased his stake by 16.01% to 7,248 shares with this purchase.

Mr. Fish has been a director of Tiffany & Co. since 2008. While the company rated well on our model, this has been the only purchase by an insider over the last six months and every other insider transaction was a sale as you can see from this page.

5. Strayer Education Inc. (STRA): $122.97

Director Robert R. Grusky acquired 400 shares of this for-profit education company, paying $123.71 per share for a total amount of $49,484. These shares were acquired indirectly through Halley Dog Investments, a company that is 100% owned by Mr. Grusky.

This is the third purchase by Mr. Grusky in the span of a week and he also purchased shares in late October and November last year.

Voluntary Disclosure: I have a long position in Strayer Education.

You can view a list of all purchases from this Insider Buying page.

Notable Insider Sales:

1. Tiffany & Co. (TIF): $57.83

This is the first time the same company has made both the top insider purchase and insider sales list. Shares of this luxury jewelry company were sold by 9 insiders:

• Director Peter W. May sold 600,000 shares for $58.83, generating $35.3 million from the sale. These shares were sold indirectly through the Trian Entities.
• Executive Vice President Beth O. Canavan sold 125,500 shares for $60.11, generating $7.54 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• Senior VP Caroline D. Naggiar sold 81,993 shares for $60.04, generating $4.92 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• President James E. Quinn sold 72,500 shares for $60.18, generating $4.36 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• Director Thomas Presby sold 15,000 shares for $60.58, generating $908,685 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• VP, Controller and Principal Accounting Officer Henry Iglesias sold 7,652 shares for $60.36, generating $461,863 from the sale. 4,500 of these shares were sold as a result of exercising options immediately prior to the sale.
• Senior VP Patrick B. Dorsey sold 5,000 shares, receiving $58.62 per share for a total amount of $293,119.
• Executive VP Jon M. King sold 3,696 shares, receiving $60.08 per share for a total amount of $222,045. These shares were sold as a result of exercising options immediately prior to the sale.

2. Apollo Group Inc. (APOL): $42.35

It was interesting to see one for-profit education company make the top purchases list (Strayer) and another one make the list of top sales. Shares of Apollo Group (parent of University of Phoenix) were sold by 2 insiders:

• Executive Chairman of the Board John G. Sperling sold 807,339 shares at an average price of $42.82, generating $34.57 million from the sale.
• Vice Chairman of the Board Peter V. Sperling sold 297,339 shares at an average price of $42.75, generating $12.71 million from the sale.

Mr. John Sperling’s shares were sold indirectly through a trust.

3. GeoResources, Inc. (GEOI): $25.8

Shares of this independent oil & gas company were sold by 2 insiders:

• Executive VP Collis P. Chandler III sold 494,500 shares for $25.00, generating $12.36 million from the sale.
• Director Michael A. Vlasic sold 494,500 shares for $23.75, generating $11.74 million from the sale.

4. MedcoHealth Solutions Inc. (MHS): $63.93

Shares of this healthcare company were sold by 2 insiders:

• CEO, Medco Celesio BV, Brian T. Griffin sold 206,358 shares for $65, generating $13.41 million from the sale.
• President and Chief Operating Officer Kenneth O. Klepper sold 148,938 shares for $65, generating $9.68 million from the sale. 122,400 of these shares were sold as a result of exercising options immediately prior to the sale.

5. Signet Jewelers Limited (SIG): $42.11

Shares of this specialty jewelry retailer (parent of Kay Jewelers, Jared The Galleria Of Jewelry, H.Samuel, and Ernest Jones) were sold by 4 insiders:

• Director Terry Lee Burman sold 198,370 shares for $42.10, generating $8.35 million from the sale. 190,370 of these shares were sold as a result of exercising options immediately prior to the sale.
• UK CEO Robert William Anderson sold 17,266 shares for $41.74, generating $720,683 from the sale. 16,109 of these shares were sold as a result of exercising options immediately prior to the sale.
• US Chief Operating Officer William Montalto sold 731 shares for $42.77, generating $31,265 from the sale. These shares were sold indirectly by Mr. Montalto’s spouse.
• UK Stores Operations Director Kevin Ryan sold 510 shares for $42.51, generating $21,680 from the sale.

You can view a list of all sales from this Insider Sales page.