Insider Weekends – January 7, 2011

Welcome to edition thirty one of Insider Weekends. Insider buying rebounded last week with insiders purchasing $18.31 million of their stock when compared to $4.46 million in the week prior. Selling also increased with insiders selling $591.21 million worth of stock when compared to $263.45 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 dropped to 32.28. In other words, insiders sold more than 32 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the week prior when the ratio stood at 59.02. 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. MannKind Corp. (MNKD): $8.2

Chairman & CEO Alfred E Mann acquired 700,000 shares of this biotech company, paying $8.22 per share for a total amount of $5.75 million.

It looks like billionaire founder Alfred Mann is once again funding MannKind with additional capital even though the filing makes it appear like a regular market purchase. The FDA stated last week that it needs an additional four weeks to make a decision about MannKind’s inhaled insulin drug called Afrezza. MannKind has spent nearly a billion dollars developing this drug and incidentally the company’s market cap is also a billion right now.

2. Lions Gate Entertainment Corp. (LGF): $6.6

Director Mark H Rachesky acquired 819,823 shares of this movie production and distribution company, paying $6.50 per share for a total amount of $5.33 million.

Even thought this is an indirect purchase by MHR Institutional Partners III LP, I decided to mention it because of the long battle between Carl Icahn on one side and Lionsgate management along with Mr. Rachesky on the other to retain control of the company. Mr. Icahn let his tender offer to buy Lionsgate shares for $7.50 expire in mid-December and the stock price immediately dropped to current levels. Mr. Rachesky worked for Carl Icahn for six years before launching his own firm. The article Meet Mark Rachesky: The Protege Who Stabbed Icahn In The Back covers part of the back story in the battle for Lionsgate.

3. Human Genome Sciences Inc. (HGSI): $25.33

CEO Thomas Watkins acquired 60,000 shares of this biotechnology company, paying $24.16 per share for a total amount of $1,449,600.

These shares were acquired indirectly by Mr. Watkin’s children as a result of a gift by Mr. Watkin’s father.

4. Cogent Communications Group Inc. (CCOI): $13.74

Shares of this ISP and communication services company were acquired by 4 insiders:

• Director Marc Montagner acquired 5,500 shares, paying $13.98 per share for a total amount of $76,890. Mr. Montagner increased his stake by 73.33% to 13,000 shares with this purchase.
• Director Blake Bath acquired 5,275 shares, paying $14.22 per share for a total amount of $75,011. Mr. Bath increased his stake by 15.37% to 39,600 shares with this purchase.
• Director Richard Liebhaber acquired 5,280 shares, paying $14.20 per share for a total amount of $74,976. Mr. Liebhaber increased his stake by 12.96% to 46,030 shares with this purchase.
• Director Tim Weingarten acquired 4,370 shares, paying $14.30 per share for a total amount of $62,491. Mr. Weingarten increased his stake by 13.00% to 37,976 shares with this purchase.

Voluntary Disclosure: I have a long position in Cogent Communications in my trading portfolio.

5. Campbell Soup Co. (CPB): $34.48

Director Archbold vanBeuren acquired 3,949 shares of this Campbell Soup, paying $34.50 for a total amount of $136,241.

These shares were acquired indirectly through a family management company and a family investment partnership.

Notable Insider Sales:

1. TD AMERITRADE Holding Corporation (AMTD): $19.65

Founder and Director Joe Ricketts sold 1,831,237 shares of this brokerage firm for $19.29, generating $35.32 million from the sale.

These shares were sold under a written trading plan adopted pursuant to Rule 10b5-1.

2. CSX Corp. (CSX): $67.79

Shares of this rail transportation company were sold by 3 insiders:

• Chairman, President and CEO Michael Ward sold 100,000 shares for $65.55, generating $6.55 million from the sale. This sale was as a result of exercising options immediately prior to the sale.
• EVP and CFO Oscar Munoz sold 25,000 shares for $65.05, generating $1.63 million from the sale. This sale was pursuant to a Rule 10b5-1 trading plan adopted on April 16, 2010.
• SVP – Human Resources Lisa Mancini sold 700 shares for $66, generating $46,200 from the sale.

3. Dish Network Corp. (DISH): $21.14

Shares of this satellite television company were sold by 2 insiders:

• EVP James DeFranco sold 399,172 shares for $19.42, generating $7.75 million from the sale. 199,600 of these shares were sold indirectly through a limited partnership. This sale was pursuant to a Rule 10b5-1 trading plan.
• SVP and Controller Paul Orban sold 325 shares for $19.74, generating $6,416 from the sale.

4. Southern Copper Corp. (SCCO): $46.53

Chairman of the Board German Larrea Mota Velasco sold 150,000 shares of this mining company for $49.34, generating $7.4 million from the sale.

This is the second week in a row Southern Copper made our list.

5. Acme Packet, Inc. (APKT): $60.76

Shares of this network equipment provider were sold by 2 insiders:

• Secretary & Assistant Treasurer Robert Ory sold 75,000 shares for $54.36, generating $4.077 million from the sale. 15,000 shares were sold indirectly by Mr. Ory’s spouse and 30,000 shares were sold indirectly through the Ory family trust.
• Chief Technology Officer Patrick Melampy sold 40,000 shares for $60.97, generating $2.44 million from the sale.

Both these sales were pursuant to a Rule 10b5-1 trading plan.